THE DUAL ROLE OF FOREIGN ASSISTANCE AND INDUSTRIALIZATION IN SHAPING POVERTY OUTCOMES: EVIDENCE FROM PAKISTAN

Abstract

The core objectives of this study are to empirically analyze the effects of industrialization, foreign loans and foreign grants on poverty alleviation through per capita income in Pakistan. It is developed based on secondary available data of the year 2010- 2025 collected from the authentic sources like State Bank of Pakistan, Ministry of Finance, Pakistan Bureau of Statistics and World Bank. The Ordinary Least Squares (OLS) method was employed to estimate the direction and magnitude of the relationships among the adopted measures. Estimates show that positive and significant impact of industrialization, foreign grants, on poverty alleviation in terms of increase in the per capita income. Foreign loans, on the one hand, exhibit negative and statistically significant association, implying that poverty increases when growth of income is retarded by external borrowing. Implications of the study the results of this paper have important implications with respect to policy; the government of Pakistan would have increased industrial development, increased foreign grant utilization but cautious borrowing from external sources need to be pursue by the government for sustainable poverty reduction for economic stability in Pakistan.