Global Business & Trade Studies

Global Business & Trade Studies

The Effects of Foreign Direct Investment, Agricultural Output, and Military Spending on Poverty in Pakistan: Evidence from the ARDL Model

Document Type : Original Article

Author
Ph.D. Candidate of Economics, Shahid Beheshti University, Tehran, Iran
10.220.34/gbts.2026.2104240.1012
Abstract
In various developed and developing countries, including Pakistan, poverty is an issue that is being discussed and debated. As part of this study, we examine the factors influencing poverty in Pakistan and discuss theoretical relationships between poverty and its main macroeconomic variables. Multiple diagnostic tests have been performed with the ARDL technique in this case. This analysis takes into account the following macroeconomic variables: Agriculture as a percentage of gross domestic product (GROSS DOMESTIC PRODUCT), Foreign Direct Investment as a percentage of Gross Domestic Product (GROSS DOMESTIC PRODUCT), Primary Education as a percentage of Gross Domestic Product, Domestic Credit to the Private Sector, and Military expenditure as a percentage of gross domestic product (GROSS DOMESTIC PRODUCT).All of these variables have a significant impact on poverty, according to the results of the analysis. A significant negative impact of education enrollment on poverty is also observed over the long term. It helps in decreasing poverty and improving the socio-economic status of both individuals as well as society. An increase in agricultural output reduces poverty in the agricultural ratio to gross domestic product. Domestic credit also has a significant negative impact on poverty, but military expenditure has a significant positive impact on poverty in Pakistan.
Keywords