Investigating the Influence of Infrastructure Development on Poverty in Emerging Markets
Keywords:
Poverty, Human Capital, Infrastructure Development, Panel DataAbstract
The positive role of infrastructure development in the economy is well defined, exhausted and
conclusive. It is the empirical studies on the influence of infrastructure development on poverty which is still
mixed, contradictory, divergent and far from being exhausted. This study contributes to literature by exploring
the impact of infrastructure development on poverty alleviation in emerging markets. It also studied the
influence of human capital development in the infrastructure development-poverty reduction nexus.
Specifically, whether human capital development is a channel through which poverty alleviation is influenced
by infrastructure development in emerging markets. The study used fixed effects and the dynamic GMM
approach with panel data from 1993 to 2021. Fixed effects show that infrastructure development significantly
reduced poverty when infant mortality and life expectancy were used as proxies. On the contrary, the dynamic
GMM approach noted that infrastructure development non-significantly decreased poverty using life
expectancy and infant mortality rate as measures of poverty. Emerging markets should therefore implement
infrastructure development enhancement policies to alleviate poverty. Fixed effects indicate that the interaction
between infrastructure and human capital development significantly reduced poverty across all the three
measures of poverty. The dynamic GMM however found out a non-significant poverty alleviating impact
influenced by the interaction between infrastructure and human capital development (when infant mortality rate
and life expectancy proxies of poverty are used). Emerging markets should implement joint human capital and
infrastructure development policies to enhance poverty alleviation. The study also encourages future empirical
research on exploring threshold levels of infrastructure development necessary to significantly improve poverty
alleviation. It also encourages investigating human capital development threshold levels that helps
infrastructure development to significantly alleviate poverty in emerging markets.
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