Relationship among Education, Poverty and Economic Growth in Pakistan: An Econometric Analysis

The objective of this study is to analyze the short run and long run relationship that exists between education, poverty, physical capital and economic growth in Pakistan while also highlight the need to eradicate poverty through pro-poor economic growth and educational enhancing strategies.  Auto-Regressive Distributed Lag (ARDL) and Toda-Yamamoto Augmented Granger Causality framework is applied on data collected from various secondary sources including Pakistan Economic Survey, publications of Federal Bureau of Statistics and Annual Reports and State Bank of Pakistan for the time period 1971-72 to 2009-10.

The results reveal that a long run relationship exists between education, poverty, physical capital and economic growth. Although, physical capital positively impacts real GDP in both short and long run, education only significantly impacts real GDP in the long run. Conversely, poverty is inversely related to real GDP in the long run and therefore policies must be designed to eradicate poverty by accelerating pro-poor economic growth in the short run and long run. The study recommends that educational strategies must be targeted at the poor whereby educational attainment and economic growth will create employment and income opportunities which will ultimately help Pakistan in eliminating poverty.