Role of Financial Efficiency and Income Distribution on the Relationship Between Economic Growth on Poverty Levels in East Africa Community Countries

Abstract

The study examined the relationship between economic growth, income distribution and poverty levels in East African Community countries. The specific objectives of the study included establishing the effect of economic growth on poverty levels in EAC countries and examining the moderating effect of income distribution on the relationship between economic growth and poverty levels in EAC countries. The study adopted both comparative and descriptive research designs. The study population was the five countries of EAC countries which included Kenya, Rwanda, Uganda, Burundi, and Tanzania. Annual data for 30 years beginning 1989 to 2018 was gathered for the study purpose. Secondary data, which consisted of annual data, was utilized in the study. The study employed normality, heteroscedasticity, multicollinearity, serial correlation, Optimal lag test, unit root diagnostic tests, cointegration test and cross sectional correlation test. The data was analyzed using both descriptive and inferential statistics with the help of excel and STATA version 14. Feasible Generalised Least Squares (FGLS) panel data regression models was used for hypotheses testing. The study results revealed that economic growth had a significant effect on poverty levels in East African Community countries. In addition, the study revealed that income distribution has a significant mediating effect on the link between economic growth and poverty levels in East African Community countries.