Investigating the Impact of Corruption on Poverty in Pakistan

Abstract

Purpose: Corruption is one of the mega issues faced by developing countries like Pakistan. It not only erodes the macroeconomic performance of a country but also widens the gap between rich and poor by accelerating income inequality and poverty level. The present tries to examine the effects of corruption on poverty in Pakistan. Design/Methodology/Approach: The present research based on the secondary data from the Transparency International and World Bank database, from the period 1997 to 2019. The study has applied the Johanson Cointegration and Vector Error Correction Method (VECM) as an econometric technique.  Findings: The empirical findings conclude that corruption and inflation are significantly and positively associated with poverty in Pakistan. However, the employed labor force shows a negative relationship with the poverty rate. Implications/Originality/Value: Based on the results, the study suggested that for the reduction and eradication of corruption the present judiciary system should be improved. Supremacy of Law should be implemented.