Abstract:

The main intention of this study was to analyze the economic factors influencing poverty in selected developing countries. Income poverty index and human poverty index were used as dependent variables, whereas economic factors (economic growth, inflation, government spending, foreign aid, income inequality, foreign direct investment, remittances, employment in agriculture, employment in industry, financial development, trade openness and economic globalization) were the explanatory variables. A panel data of 23 developing countries was taken for 20 years i-e 1997-2016. Principal Component Analysis was used to construct poverty indices and System Generalized Method of Moments (System GMM) (one step) technique was used to find a dynamic effect on poverty. The results suggested that the explanatory variables affect poverty negatively as well as positively. Income inequality, government expenditures, and foreign direct investment had a positive relationship with poverty, whereas economic growth, financial development, trade openness, and economic globalization had negative relationship with poverty. Moreover, inflation, foreign aid, remittances, employment in agriculture, employment in industry showed both positive as well as negative relationship with poverty.

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