Poverty Within Nation-States: The impact of Corruption, Trade, Income Inequality, Population Growth, Foreign Aid, and Military Expenditure

Abstract

Theoretical approaches to development have marginalized poverty and the individual from the developmental debates. Instead, these approaches place the state as the conventional unit of development and tended to address poverty at the societal level. In these respects, these approaches have neglected how development affects poverty at the individual level. This study criticizes one of these approaches, the modernization theory of Development, and analyzes the relationship between poverty and some economic, political, and social factors. These factors include openness to trade, foreign aid, military expenditure, income inequality, corruption, and population. There have been several studies examining the relationship between poverty and one or some of the above factors. However, most of the previous discussions rely upon case studies and do not control for all of the above factors. This study attempts to fill this gap, and uses longitudinal data to examine to what extent these factors affect poverty within nation-states over time. The panel data include observations that cover 135 countries and the years between 1995 and 2011. The findings reveal that there is a positive and significant relationship between income inequality and poverty over time. The results also show a negative and significant relationship between poverty and the level of development. Finally, this study illustrates that there is not a systematic relationship between poverty and openness to trade, foreign aid, military expenditure, corruption, and population.