Determinants of Poverty in 16 Developing Asian Countries: Cross-Country Panel Evidence, 2011–2022

Farawi Ghannili; Taosige Wau

doi:10.67462/econesta.c80fnc06

Authors

Farawi Ghannili Universitas Padjadjaran Author https://orcid.org/0009-0002-7963-1376
Taosige Wau Universitas Islam Negeri Sunan Kalijaga Yogyakarta Author

DOI:

https://doi.org/10.67462/econesta.c80fnc06

Keywords:

Macroeconomics, Financial Inclusion, Poverty, ECM, Asian Countries

Abstract

This study investigates the relationship between inflation, control of corruption, tertiary education enrolment, financial inclusion, portfolio investment, unemployment, and poverty across 16 developing Asian countries from 2011 to 2022. Poverty is quantified using the poverty headcount ratio, based on the $3.65-a-day poverty line. Utilizing an unbalanced panel dataset sourced from the World Bank, the study applies a Random Effects Model (REM) as the preferred specification for long-run estimation, as determined by the Lagrange Multiplier and Hausman tests. Short-run relationships are analyzed using an Error Correction Model (ECM). The long-term REM estimates reveal that tertiary education enrolment is the sole statistically significant variable, demonstrating a negative correlation with poverty . In contrast, inflation, control of corruption, financial inclusion, portfolio investment, and unemployment do not exhibit statistical significance in the long term. In the short term, inflation , tertiary education enrolment , and financial inclusion are negatively and statistically significantly associated with poverty. Conversely, control of corruption, portfolio investment, and unemployment do not show statistically significant relationships. This study provides cross-country panel evidence on the distinctions between short-term and long-term relationships among socioeconomic factors and poverty in developing Asian countries. Nonetheless, the positive and statistically significant error-correction coefficient does not suggest conventional convergence towards long-term equilibrium, necessitating caution in interpreting the adjustment dynamics.

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