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Title Public Spending and Poverty: The Mediating Role of Social and Physical Infrastructure in Developing Countries

Author(s) Mr Muhammad Akbar

Abstract The basic purpose of this research is to study the relationship between poverty and public spending through the mediating role of social and physical infrastructure. Social infrastructure consists of literacy rate and health expenditures and physical infrastructure includes access to electricity as energy and rail line as transportation. This study analyzes panel data for 52 developing countries for the period of 1981-2020. To investigate the relationship between poverty and public spending, mediation and moderation methodologies have been used following Hayes, A. F. (2017) and Latif et al., (2017). Empirical analysis for mediation analysis is subject to seemingly unrelated regression (SUR) developed and suggested by Biorn, (2004) and that is the most suitable technique for unbalanced panel data so far while moderation analysis is carried out using fixed and random effects models for panel data. Based on empirical analysis carried out to find the impact of public spending on poverty for the panel of developing countries through the channel of social infrastructure i.e. literacy rate and health expenditures, this study finds that public spending reduces poverty directly as well as indirectly. The mediating and moderating role of social infrastructure i.e. literacy rate and health expenditures, was also found significant. Similarly, the empirical analysis carried out to find the impact of public spending on poverty for the panel of developing countries through the channel of physical infrastructure i.e. energy (access to electricity) and rail lines, it is concluded that public spending reduces poverty directly as well as indirectly. The mediating role of physical infrastructure i.e. energy and rail lines, it is concluded that this channel is also significant in the case of panel developing countries. Energy plays a moderating role in reducing poverty but rail lines do not help to reduce poverty as a moderator. This study further concludes that some control variables like foreign remittances, unemployment, trade openness, population growth, GDP growth rate, and inflation rate also affect poverty in developing countries. From the results of this study, it is concluded that foreign remittances, trade openness, and GDP growth reduce poverty in developing countries. Based on the results, it is also concluded that unemployment, population growth, and inflation are responsible for high levels of poverty in the panel countries.

Type Thesis/Dissertation PhD

Faculty Management Sciences

Department Economics

Language English

Publication Date 2024-01-04

Subject Economics

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