Poverty Reduction Programmes and Household Well-being in South Asia: The Role of Social Protection, Economic Security and Human Capital

Abstract

This research analyzes the impact of poverty alleviation initiatives on households' well-being in seven countries of South Asia between 2010 and 2025. The study adopts a broader understanding of poverty than is usually provided by monetary measures, and examines the pathways by which poverty reduction policies and programs will lead to welfare. The study utilizes a balanced panel of data and fixed-effects estimation, System Generalised Method of Moments (GMM) and Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) methodologies to account for country specific heterogeneity, dynamic relations, endogeneity, cross sectional dependence and long-run equilibrium effects. The results show that the intensity of poverty reduction programmes is positively and statistically significant for household well-being in both the long and short terms, and that the long-term impact is greater than the short-term impact. The mediation analysis also suggests that economic security, human capital and financial inclusion are key mechanisms by which poverty reduction programmes are associated with household well-being. In addition, governance quality positively moderates this relationship, suggesting that the capacity of the institutions positively influences the welfare returns from poverty reduction interventions. Robustness and heterogeneity analyses show that the main results are robust to other specifications and country groupings. The study suggests that effective poverty alleviation needs to be seen as more than just adding to programme spending, as continuous interventions are needed to bolster household economic security, human capabilities and financial inclusion, all of which are underpinned by effective governance, in order to ensure that poverty alleviation efforts will lead to lasting improvements in household well-being. Results have key policy implications on how to create poverty reduction strategies that are integrated and institutionally responsive in South Asia.