Foreign Lending Dilemma and Poverty in Pakistan, India and Bhutan: A Panel Data Analysis
DOI:
https://doi.org/10.26710/reads.v3i1.39Keywords:
Poverty Headcount Ratio, IMF, World Bank, SAP, Dilemma.Abstract
Purpose: In developing countries foreign lending becomes a problem now a
day instead of spend this lending for the development purposes. Ultimately
this problem causes poverty in these countries where usage of foreign
lending is not in proper ways. The purpose of this study is to investigate the
impact of IMF and World Bank lending on poverty in Pakistan, India and
Bhutan. In this study corruption, GDP, unemployment, secondary
enrolment, and external debt are used as independent variables and poverty
headcount ratio as dependent variable. Study finds out the relationship of
corruption, unemployment and external debts with poverty and showing the
positive relationship while secondary enrolment and GDP showing negative
relation with poverty. Moreover study finds out that lending of IMF and
WORLD BANK mostly causes poverty in these developing countries
instead of reducing poverty because of corrupt government’s weak policies
for the distribution of loans. It is examined that the countries with strong
policies and non-corrupt government can take full advantage of these
lending for poverty reduction. But it is noticed that the countries which are
the members of IMF structural adjustment programs are facing more
poverty problems as compare to those countries which are not involved in
these programs or even have less numbers of lending. Those countries are
much better than the countries involve in structural adjustment programs.
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