An Econometric Analysis of Investment and Poverty: A Panel-Data Analysis of Selected Asian Economies

Abstract

This paper is an endeavor to explore the contribution of investment towards poverty reduction. A balanced panel of fifteen selected Asian countries was developed, covering the annual data of 25 years ranging from year 1993 to 2017. In addition to the investment, analysis was controlled through the inclusion of variables such as inflation rate, employment rate and Human Development Index (HDI). Unit root tests followed by the cointegration tests were applied that verified the existence of a long run association between investment and poverty. Furthermore, the coefficients of the variables were estimated through fully modified ordinary least squares (FMOLS) method of panel regression. The findings tend to support the literature and validate that investment reduces poverty significantly. This alludes to the fact that policy makers may design development policies in a way that could enable the investment as conducive towards poverty reduction and development.