In Search of Pakistan’s Inclusive Growth: Evidence from Income and Non-Income Dimensions

Abstract

Inclusive growth (INCL_GRTH) is a process through which economic opportunities are available for all segments of society without any discrimination between rich and poor. The aim of this study is to find how socio-economic factors affect poverty and how we may achieve INCL_GRTH and reduce poverty in a country like Pakistan. The study has used a poverty headcount ratio as a proxy for INCL_GRTH while the number of income and non-income poverty factors, including, per capita GDP, FDI inflows, agriculture value added, health expenditures, income inequality and education expenditures are highlighted as explanatory factors. The results show that poverty is substantially reduced by increasing education expenditures and FDI inflows. The pro-poor growth estimates have confirmed that except agriculture value added, the remaining factors show anti-poor growth in a country, while agriculture value added gives marginal benefits to the poor as compared to the non-poor between the two time periods studied, that is 1980 and 2016.