The Impact of Public Spending on Poverty through the Channel of Social Infrastructure: An Empirical Analysis of Asian Economies

Abstract

This study empirically investigated the mediating role that education plays to channelize Public Spending towards Poverty alleviation in Asian economies. To capture the direct and indirect link between the main explained variable poverty and explanatory variable Public Spending, a relatively new methodology known as Moderated Mediation, has been adopted. For empirical analysis, Seemingly Unrelated Regression technique (SUR) was employed. Results revealed an inverse and significant relationship between Public Spending and Poverty in direct as well as indirect way. The direct impact of public spending on Poverty alleviation programs expressed a strong impact on poverty reduction. The indirect impact that public spending has on poverty through education found inverse and highly significant. The high rate of population growth, unemployment and high inflation cause poverty in sampled Asian economies. Suitable policies need to be adopted in order to cope with poverty in the aforementioned economies.