From connectivity to prosperity: assessing the Belt and Road Initiative’s impact on poverty reduction in Pakistan

The Belt and Road Initiative (BRI), particularly the China-Pakistan Economic Corridor (CPEC), has emerged as a key driver of infrastructure development and economic growth in Pakistan. This study is among the first to employ wavelet coherence analysis (WCA) to assess the dynamic impact of the BRI on poverty in Pakistan. In addition, this study utilizes the Autoregressive Distributed Lag (ARDL) model, Fully Modified Ordinary Least Squares (FMOLS), and Dynamic Ordinary Least Squares (DOLS). The findings reveal that while BRI investments show limited short-term poverty reduction due to project gestation periods, their long-term effects are significant, as BRI investments substantially reduce poverty by fostering infrastructure development, attracting foreign direct investment (FDI), and stimulating economic growth. Employment generation and urbanization play crucial roles in shaping economic outcomes, while governance and policy measures influence the equitable distribution of benefits, with inflation emerging as a major constraint. The study highlights the need for inclusive policies that prioritize pro-poor infrastructure development, equitable regional investment, and sector-specific anti-inflation measures to directly support Sustainable Development Goals, particularly SDG-1 (No Poverty), by reducing income disparities and improving the livelihoods of vulnerable communities. These insights provide valuable policy implications for ensuring that BRI fosters sustainable and inclusive economic growth in Pakistan.