ABSTRACT
This paper aims to investigate the role of institutions in the long-term relationship between globalization and poverty. The autoregressive distributed lag (ARDL) model of co-integration is employed to estimate the long-run equilibrium relationship in the context of Pakistan over annual time series data spanning from 1984 to 2015. The KOF index is used to measure globalization, and the weighted average of five variables— democratic accountability, government stability, law and order, corruption control, and bureaucratic quality—is used to assess institutional quality. Our results demonstrate that the impact of globalization on reducing poverty would increase in the presence of high-quality institutions. However, the size effect of institutional quality is not large enough to reap the full benefits of globalization in mitigating poverty in the country. Other control variables in the model reveal that unemployment and government spending increase poverty, whereas GDP growth is found to reduce it.
