Exploring the Asymmetric Effect of Internal and External Economic Factors on Poverty: A Fresh Insight from Nonlinear Autoregressive Distributive Lag Model

Rui M. Dantas (ISCAL-Instituto Superior de Contabilidade e Administração de Lisboa, Instituto Politécnico de Lisboa, Avenida Miguel Bombarda 20, Lisboa,)
Shahzad Ali (Department of Management Sciences, The Superior University Lahore, Pakistan & School of Economics, Finance and Banking, University Utara Malaysia (UUM), Kuala Lumpur,)
Muhammad Rafiq (Department of Management Sciences, The Superior University, Lahore,)
José Moleiro Martins (1) ISCAL-Instituto Superior de Contabilidade e Administração de Lisboa, Instituto Politécnico de Lisboa, Avenida Miguel Bombarda 20, Lisboa, Portugal. 4) Instituto Universitário de Lisboa (ISCTE-IUL), Business Research Unit (BRU-IUL), 1649-026 Lisboa)
António Abreu (5) Lisbon Higher Institute of Engineering (ISEL), Lisbon Polytechnic Institute, 1959-007 Lisboa, Portugal. 6) Center of Technology and Systems (UNINOVA-CTS) and Associated Lab of Intelligent Systems (LASI), 2829-516 Caparica,)
Mário Nuno Mata (ISCAL-Instituto Superior de Contabilidade e Administração de Lisboa, Instituto Politécnico de Lisboa, Avenida Miguel Bombarda 20, Lisboa,)

Emerging Science Journal
Vol 7, No 3 (2023): June

Objective: This study examines the asymmetric impact of both internal (military, education, and health expenditures) and external (trade opening and foreign direct investment) factors that contribute to poverty reduction. Methodology: To find an asymmetric relationship between the proposed variables, we used a non-linear ARDL co-integration approach for the period ranging from 1981-2019. Findings: The findings of the study confirm the asymmetric impact of internal (education, military, health expenditures, quality of governance) and external (foreign direct investment, openness) factors on poverty. The finding confirms that ignoring nonlinear or asymmetric properties of macroeconomic variables may mislead inferences. This study has policy implications for government officials to reduce poverty. Novelty: theeconomic theory of poverty is studied from different perspectives by using internal and external factors that have direct and indirect effects on poverty. Furthermore, for in-depth analysis, a nonlinear approach is used to determine which factor has a strong contribution to eliminating poverty. Doi: 10.28991/ESJ-2023-07-03-07 Full Text: PDF