Growth-Poverty Linkages: Does Sectoral Composition Matter for Pakistan?

This study seeks to investigate the growth in agricultural, industrial and services sector of Pakistan in terms of their relative impacts on poverty reduction within the country. Further, it identifies the dynamic effects of growth on poverty as a way to capture the usual ‘trickle down’ effects. Secondary data ranging from 1981-2010 are used in the analysis and the results are obtained through regression analysis. The findings reveal that poverty is mostly affected by the growth rate in industrial sector. Moreover, our findings suggest the presence of both ‘static’ as well as ‘dynamic effects’ of growth on poverty reduction. It is suggested in this paper that the government should make all out efforts to pursue the growth of the industrial sector at this transitional stage of the economy so that the slide towards poverty could be halted.