Impact Analysis Of Poverty On Economic

Development.

By

Anwish Zameer 02-116231-037

Muhammad hammad 02-116231-005
Muhammad Bilal 02-116231-008
Mismir hassan 02-116231-001
Sara zafar 02-116231-035
Humayoun khan 02-116231-021
Etizaz Hussain 02-116231-038
Amna Irfan 02-116231-007

Supervisor:
Prof. Dr. Azam Ali

May,2023
 ABSTRACT

Poverty remains one of the most significant global challenges, affecting millions of people
worldwide. It is not only a moral issue but also an economic one, as it can hinder economic growth
and development. This paper provides a comprehensive analysis of the impact of poverty on
economic development, exploring the causal relationships, dynamics, and consequences of poverty
on various economic indicators and sectors. Drawing on a review of the literature on poverty and
economic development, this paper discuss the challenges and opportunities that poverty creates for
sustainable economic growth and identifies potential strategies and interventions for poverty
reduction and inclusive development.

The study examines the significant obstacles that poverty creates for economic development,
including underinvestment, poor health outcomes, limited education opportunities, and social
exclusion. This is done by adapting qualitative technique of research. For this we developed a
structural questioner to conduct survey from students of bukc. It argues that poverty reduction
programs and policies are essential for promoting economic development, citing examples of
successful poverty reduction programs such as conditional cash transfer programs and microfinance
initiatives. The paper also highlights the importance of education in reducing poverty and improving
economic outcomes, citing studies that link education to higher earnings and better health outcomes.

Furthermore, the study analysis the role of social safety nets, healthcare, job creation, and investment
in promoting economic development and reducing poverty. It concludes by outlining the potential
strategies and interventions for poverty reduction and inclusive growth and highlighting the need for
a comprehensive and coordinated approach to tackle poverty and promote sustainable economic
development.

In summary, this provides valuable recommendations to help policymakers and researchers, offering
insights into the impact of poverty on economic development and the policies that can be
implemented to address this issue. It provides a well- structured and up-to-date review of the
literature on poverty and economic development, highlighting the significant challenges and
opportunities for inclusive growth and poverty reduction.
Keywords: Analysis, Poverty, Economic development
Disclaimer: The data used and hypothecation done in this study is the responsibility of the author
and not their organization or institution.

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 CHAPTER 1: INTRODUCTION

1.1Background of the Study

Economic growth and development are closely linked to the reduction of poverty and addressing
related issues. Poverty, defined as a lack of access to basic necessities such as food, shelter, and
clothing, is a persistent problem in many countries. Addressing poverty and related issues can lead
to economic growth and development, as it creates opportunities for individuals to improve their
standard of living, access education and healthcare, and participate in economic activities.

The United Nations Sustainable Development Goals (SDGs) outline poverty eradication as the
first goal, emphasizing the importance of addressing poverty in achieving sustainable
development. Poverty is a multifaceted issue that requires a multifaceted approach to address it.
This approach involves addressing the root causes of poverty, such as lack of access to education
and healthcare, inadequate infrastructure, and economic inequality, among others.

This paper will explore the relationship between economic growth and development and poverty
reduction. The first section will provide an overview of poverty and its causes. The second section
will examine how addressing poverty can lead to economic growth and development. The third
section will explore the challenges of addressing poverty and related issues. Finally, the paper will
conclude by discussing policy recommendations to address poverty and related issues to promote
economic growth and development.

Poverty is a complex issue that is influenced by a wide range of factors, including economic,
social, and political factors. Poverty can be categorized into two types: absolute poverty and
relative poverty. Absolute poverty is a condition where an individual is unable to access the basic
necessities of life, such as food, water, shelter, and clothing. Relative poverty is a condition where
an individual's standard of living is below the average standard of living in a given society.

One of the primary causes of poverty is lack of access to education and healthcare. Education is
crucial in empowering individuals to improve their economic status, as it provides them with the
necessary skills to participate in economic activities. Lack of access to education leads to low
literacy rates and limited job opportunities, which perpetuate poverty. Similarly, lack of access to
healthcare limits individuals' ability to work for the economy, leading to a cycle of poverty.

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Another cause of poverty is inadequate infrastructure. Poor infrastructure, including roads,
electricity, and water supply, limits economic opportunities, making it difficult for
individuals to access jobs and markets. Poor infrastructure also limits access to essential
services such as healthcare and education, perpetuating poverty.

Economic inequality is another cause of poverty. In many countries, the gap between the rich
and poor is widening, with the rich getting richer and the poor getting poorer. Economic
inequality limits opportunities for the poor, making it difficult for them to improve their
economic status. It also leads to social unrest, affecting economic growth and development.

Addressing poverty and related issues can lead to economic growth and development by
creating opportunities for individuals to improve their standard of living, access education and
healthcare, and participate in economic activities.

One of the ways addressing poverty can lead to economic growth and development is by
increasing access to education. Education provides individuals with the necessary skills to
participate in the economy, increasing their employability and income potential. Education
also promotes innovation and entrepreneurship, which can drive economic growth.

Similarly, addressing poverty by increasing access to healthcare can lead to economic growth
and development. Healthy individuals are more productive and can contribute more to the
economy. Healthcare also reduces the cost of illness, enabling individuals to save more and
invest in economic activities.

Improving infrastructure is another way addressing poverty can lead to economic growth and
development. Improved infrastructure, including roads, electricity, and water supply, creates
opportunities for individuals to access markets and jobs. Improved infrastructure also enables
the delivery of essential services such as healthcare and education, which promotes economic
growth.

In addition, addressing economic inequality can also promote economic growth and
development. Economic inequality limits opportunities for the poor, making it difficult for
them to access resources and participate in economic activities. Addressing economic

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inequality through policies such as progressive taxation and social welfare programs can
promote more equitable distribution of resources and opportunities, promoting economic
growth and development.

Furthermore, addressing poverty can also promote social stability, which is crucial for
economic growth and development. Poverty often leads to social unrest, which can negatively
impact economic growth and development. By addressing poverty and related issues,
governments can promote social stability, enabling individuals to participate in economic
activities and promoting economic growth.

Addressing poverty and related issues is not without challenges. One of the primary
challenges is lack of resources. Many developing countries have limited resources, making it
difficult to address poverty and related issues. Lack of resources limits governments' ability
to invest in infrastructure, education, and healthcare, among others.

Another challenge is corruption. Corruption can divert resources intended for poverty reduction
to other uses, perpetuating poverty. Corruption also undermines the credibility of governments,
making it difficult for them to attract foreign investment and promote economic growth and
development.

Inadequate institutional capacity is also a challenge to addressing poverty and related issues.
Many developing countries lack the institutional capacity to effectively implement poverty
reduction programs. Inadequate institutional capacity can lead to poor implementation of
poverty reduction programs, limiting their effectiveness and perpetuating poverty.

Finally, political instability can also hinder efforts to address poverty and related issues.
Political instability can create uncertainty and hinder investment, limiting economic growth
and development. Political instability can also undermine poverty reduction programs, making
it difficult to address poverty.

To address poverty and related issues to promote economic growth and development,
governments need to adopt policies that address the root causes of poverty. The following are
policy recommendations to address poverty and related issues:

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 1.2 Major Issues:
Increase investment in education and healthcare: Governments should increase
investment in education and healthcare to improve access to these essential services,
promoting economic growth and development.

Improve infrastructure: Governments should invest in improving infrastructure, including

roads, electricity, and water supply, to create opportunities for individuals to access markets
and jobs, promoting economic growth and development.

Address economic inequality: Governments should adopt policies that address economic
inequality, such as progressive taxation and social welfare programs, to promote equitable
distribution of resources and opportunities, promoting economic growth and development.

Address corruption: Governments should adopt policies to address corruption, such as

improving transparency and accountability, to ensure that resources intended for poverty
reduction are not diverted to other uses, promoting economic growth and development.

Build institutional capacity: Governments should invest in institutional capacity to

effectively implement poverty reduction programs, promoting economic growth.

Promote social stability: Governments should promote social stability to enable individuals
to participate in economic activities and promote economic growth and development.

In conclusion, economic growth and development are closely linked to the reduction of
poverty. Poverty is a multifaceted issue that requires a multifaceted approach to address it.
Addressing poverty and related issues can lead to economic growth by creating opportunities
for individuals to improve their standard of living, access education and healthcare, and
participate in economic activities. However, addressing poverty and related issues is not
without challenges, including lack of resources, corruption, inadequate institutional capacity,
and political instability. Governments need to adopt policies that address the root causes of
poverty, such as increasing investment in education and healthcare, improving infrastructure,
addressing economic inequality, addressing corruption, building institutional capacity, and
promoting social stability, to promote economic growth and development.

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 CHAPTER 2: LITERATURE REVIEW

• ECONOMIC GROWTH AND DEVELOPMENT BY ADDRESSING POVERTY AND

RELATED ISSUES:-

Muhammad Akram and Khalid Zaman (2019) studied the relationship between poverty and
economic development in Pakistan. The study uses data from various sources including
World Bank and Pakistan Economic Survey. The authors used descriptive statistics and
regression analysis to analyze the data and test the hypotheses. The study found a negative
relationship between poverty and economic development in Pakistan. Poverty is delaying
economic development by reducing the human capital and decreasing investment. The paper
recommends a multi-faceted approach to address poverty including increasing access to
education, jobs opportunity, improving infrastructure, education, health care increasing
access to credit, and implementing pro-poor policies..

• EDUCATION AND POVERTY IN ECONOMIC GROWTH:-

Afzal et al. (2012) indicated the relationship among education, Poverty and economic growth
in Pakistan. An empirical study shows that the education increases economic growth on other
side, it decreases poverty by growing efficiency. they used Johnson co-integration model.
The results show that the income growth plays a temperately positive role in improving
poverty, but the income distribution does not play a key role in alleviation in the sample
overall. The empirical study also reveals that the education is the most significant contributor
in poverty alleviation. They applied generalized least squares (GLS) technique. They used
panel data of 40 developing countries for the period 1999-2007. This study concluded that
gross primary education enrollment has significant negative impact on poverty in long run.
From this result it can be inferred that education helps in reducing poverty and improving the
socio economic status of both the individuals as well as the society. By educating more
individuals in the country, the population of poor can be reduced. Recommended Education
needs to be delivered inclusively equitably and effectively across Pakistan to confirm that it
is a driver of social cohesion and resilience. The government of Pakistan should make further
efforts to ensure the quality and coverage of education through effective policy implications

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and allocation of expenditure. The curse of poverty therefore, can be avoided through quality
of education.

• IMPACT ANALYSIS OF POVERTY ON ECONOMIC DEVELOPMENT:-

Dr. Samiullah 2019 "The Impact of Poverty on Economic Development: A Review of

Literature" provides a comprehensive analysis of the obstacles that poverty creates for
economic development. The author reviewed and analyzed the key findings from a variety of
sources including academic journals, books, reports from international organizations, and
government publications, among others to provide a deeper understanding of the
relationship between poverty and economic development. The article highlights the
importance of poverty reduction programs and policies in promoting economic development
and discusses the role of education in reducing poverty and improving economic outcomes.
It is a well-researched, valuable resource for policymakers and researchers. The article is
structured well and cites a wide range of up-to-date sources. It provides a thorough review of
the literature on poverty and economic development.

• MILITARY EXPANDITURES AND POVERTY:-

Kalim and Hassan (2013) 'studied' the military expenditures and poverty in Pakistan. They
used johensen co- integration test with time series data from 1972 to 2009. The study reveals
that the military expenditure and inflation have positive effect on poverty in Pakistan.both in
short and long run,while the growth of industrial sector and services helps in reducing
poverty. The author concluded that, it is evident from this study that defense expenditure has
significant positive impact on poverty in Pakistan. As increased in military expenditure has
trade off effect on the spending on other productive sector and it leads to reduce spending on
productive sectors like education other development sectors. These reductions ultimately
increases poverty rate in the country.

• IMPACT ANALYSIS OF POVERTY ON ECONOMIC DEVELOPMENT:

Muhammad Irfan Chani etal (2011) studied "Poverty, Inflation and Economic growth". They
said poverty is one of the most serious challenges faced by the developing countries like
Pakistan. However for reducing poverty, it is imperative to understand the factors that cause
poverty. It is argued in this paper that inflation, economic growth, investment, and trade
openness are closely linked with poverty in Pakistan. To check the nature and magnitude of

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this relationship, they used ARDL bound testing approach to co-integration is used in this
study. A time series annual data for all the variables is used over the period of 1972-2008.
The Empirical results show that economic growth and investment have significantly reduced
poverty, while both the inflation and trade openness have caused an increase in poverty in
Pakistan. They concluded that trade openness increases output, employment, consumption
and thus welfare and reduces poverty. However this argument is not supported by the
findings of this paper as far as the direction of the effect of trade openness on poverty is
concerned. Although the coefficient on trade openness is not statistically significant, but it
carries positive sign, which implies that opening up of trade has increased the level of poverty
in Pakistan. This may be due to unfavorable balance of payment as well as worst terms of
trade.

• IMPACT ANALYSIS OF POVERTY ON ECONOMIC DEVELOPMENT:

R. Michael Alvarez publish on March 19 the author synthesized information from a range of
studies and reports on poverty and economic development to provide a comprehensive
overview of the topic. The author reviewed and analyzed the key findings from a variety of
sources including academic journals, books, reports from international organizations, and
government publications, among others to provide a deeper understanding of the relationship
between poverty and economic development. Michael Alvarez literature review that analyzes
the relationship between poverty and economic development in developing countries. The
article highlights that poverty can have both direct and indirect impacts on economic growth.
Poverty can lead to reduced access to credit and financial resources, limited investments in
education and healthcare, and a cycle of underinvestment in human capital. Additionally,
poverty can lead to social unrest and conflict, which can further hinder economic
development. The article suggests that policies that promote inclusive economic growth,
investments in human capital, and improvements in infrastructure can help reduce poverty
and promote economic development. The author argues that addressing poverty is crucial for
achieving sustained economic growth and development, and policymakers should prioritize
poverty reduction as a critical component of economic growth and development strategies.

• IMPACT ANALYSIS OF POVERTY ON ECONOMIC DEVELOPMENT:

The author Oludayo published the article on march 8 2019 the author synthesized
information from a range of studies and reports on poverty and economic development to

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Provide comprehensive overview of the topic. The author reviewed and analyzed the key
findings from a variety of sources including academic journals, books, reports from
international organizations, and government publications, among others to provide a deeper
understanding of the relationship between poverty and economic development. Michael
Alvarez literature review that analyzes the relationship between poverty and economic
development in developing countries. Osotimehin is an empirical study that examines the
impact of poverty on economic development in Nigeria. The authors used a mixed-method
approach to analyze the relationship between poverty and economic development. The study
found that poverty has a negative impact on economic development and that poverty
reduction policies can promote economic growth. The authors suggest that targeted policies
that promote inclusive economic growth and investments in human capital are necessary for
reducing poverty and achieving sustained economic development in Nigeria. The article
provides valuable insights into the relationship between poverty and economic development
in a specific context and highlights the importance of poverty reduction for achieving long-
term economic growth.

• IMPACT ANALYSIS OF POVERTY ON ECONOMIC DEVELOPMENT:

Ahmed,E.., Ludlow and Mahmood M.A research on major poverty and inequality in Pakistan
The major objective of this research is to examine the relationship between poverty, income
inequality and economic growth from some selected developing countries. This study uses
panel data for the period of 2002-2015. All the data is taken from world development
indicators (WDI). To find out the results, we have used Hausman test an econometrics
technique for panel data in this research. The results of the study indicate that poverty and
income inequality have a negative impact on economic growth on the other hand Gross
capital formation, labor force, total population and government consumption and expenditure
have a positive impact on economic growth. The result tells us that changes in these variables
have a significant and positive effect on the dependent variable. To achieve the goal of
economic growth developing countries should reduce poverty and take meaningful steps to
overcome the problem of inequality in the society which can be very helpful in achieving the
goal of economic growth.

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 CHAPTER 3: METHODOLOGY

The methodology used in this paper is primarily based on a literature review. The researchers
have conducted a comprehensive analysis by reviewing and analyzing a variety of sources,
including academic journals, books, reports from international organizations, and government
publications. The purpose of the literature review is to gather relevant information and
insights on the impact of poverty on economic development.

The researchers have employed a systematic approach to identify and select the literature for
review. They have searched for relevant studies and reports using appropriate keywords
related to poverty, economic development, education, healthcare, infrastructure, and other
related factors. The selected literature has been critically analyzed to identify the key findings,
arguments, and evidence regarding the impact of poverty on economic development.

The analysis presented in this paper is based on the synthesis of the findings from the
reviewed literature. The researchers have examined the causal relationships, dynamics, and
consequences of poverty on various economic indicators and sectors. They have identified the
challenges and opportunities that poverty creates for sustainable economic growth and
development.

Moreover, the paper also discusses potential strategies and interventions for poverty reduction
and inclusive development. Examples of successful poverty reduction programs, such as
conditional cash transfer programs and microfinance initiatives, are cited. The importance of
education, healthcare, infrastructure, social safety nets, job creation, and investment in
promoting economic development and reducing poverty is also examined.

The paper concludes by outlining the potential strategies and interventions for poverty
reduction and inclusive growth and emphasizes the need for a comprehensive and coordinated
approach to tackle poverty and promote sustainable economic development

.Overall, the methodology used in this paper relies on a thorough review and analysis of
existing literature to provide insights into the impact of poverty on economic development and
the policies that can be implemented to address this issue.

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CHAPTER 4: ANALYSIS & FINDINGS

QUALIFICATION
Phd
7%
MBA
10%

BBA Others
23% 60%

Others BBA MBA Phd

AGE GROUP

36-45
11%

26-35
25%

18-25
64%

18-25 26-35 36-45

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DO YOU BELIEVE POVERTY EFFECT
ECONOMIC DEVELOPMENT

No
10%

Yes
90%

Yes No

DO YOU THINK LACK OF ACCESS TO

QUALITY EDUCATION IS MAJOR
CONTRIBUTOR TO POVERTY

No
14%

Yes
86%

Yes No

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 CAN PROBLEM LIKE FIGHTING OR RIOTS
MAKE IT HARDER FOR COUNTRY TO MAKE
MONEY
No
2%

Yes
98%

Yes No

DOES LACK OF INFRASTRUCTURE, SUCH AS

ROADS AND ELECTRICITY, LIMIT ECON0MIC
GROWTH IN POOR COMMUNITIES

No
40%

Yes
60%

Yes No

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 CAN LACK OF ACCESS TO CREDIT MAKE IT
DIFFICULT FOR INDIVIDUALS TO START
BUSINESS OR INVEST IN THEIR EDUCATION

No
20%

Yes
80%

Yes No

DOES POVERTY AFFECTS HEALTH AND

PRODUCTIVITY OF INDIVIDUALS AND IN
TURN, HINDER ECONOMIC DEVELOPMENT

No
20%

Yes
80%

Yes No

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 CHAPTER 5: RECOMMENDATIONS

• Foster entrepreneurship and provide access to credit and financial resources.

• Improve access to affordable healthcare services, particularly for vulnerable
populations.
• Enhance rural development through infrastructure and income-generating opportunities.
• Promote inclusive urban development with affordable housing and job creation.
• Address discrimination and promote equal opportunities.
• Foster collaboration with NGOs, civil society, and the private sector.
• Establish effective monitoring systems for poverty reduction programs.
• Prioritize sustainable solutions that tackle root causes of poverty, such as inequality and
lack of resources.

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 CHAPTER 6: CONCLUSION

• Poverty hampers economic development through low productivity and limited

opportunities.
• Inadequate access to education, healthcare, and skills training hinders human capital
development.
• Poverty reduces consumer demand, slowing economic growth.
• Concentrated poverty causes social unrest, hindering economic development.
• Limited financial resources hinder entrepreneurship and business development.
• Poverty strains government budgets, limiting investment in infrastructure and public
services.
• Targeted policies are necessary to break the poverty cycle and promote development
while reducing inequality.
• Investments in education, healthcare, and social protection alleviate poverty and
enhance human capital.
• Enabling entrepreneurship empowers individuals to escape poverty and contribute to
development.

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