The impact of economic growth on unemployment and poverty : evidence from Muslim countries

Abstract

Economic growth, employment, and poverty are major factors and critical dimensions of development that affect significantly the lives of the people in nations which are members of the Organization of the Islamic Cooperation (OIC). This research is dedicated to exploring the interaction of economic growth, unemployment, and poverty in the context of Muslim-OIC countries. The importance of this study stems from the fact that it carries the prospects for shedding light on the crucial economic phenomena of the growth of economic operations and the effects of this growth on unemployment and poverty with reference to the special conditions of the OIC countries. A detailed research study of correlation between economic growth, unemployment and poverty in Muslim countries has been done with the help of data analysis for the years 1990-2022. The study has been designed to synthesize quantitative data collected and the number of Muslim countries used in the study vary in accordance to the availability of data. The data from OIC countries in Europe, South America, Central Asia, Middle East, south & South east Asia, and Africa and aimed to assess the economic growth impact on these vital socioeconomic indicators. Analyzing the regression results derived from the POLS, Fixed Effects, and Random Effects; it is possible to highlight the following findings that will help to explain the interrelated processes taking place. For instance, FE model estimated shows that the coefficient of GDP per capita (-2.681) has a negative impact on poverty level, meaning that with the increase in GDP per capita, poverty level significantly reduces in the countries. In the same vein, although the coefficient for trade is positive (0.011) when estimated using the results from the RE model, the effect on poverty is less profound compared to what the FE model show. Besides, the findings of the regression analysis have revealed the significance of factors like FDI, the structure of labor force with varying education standard and population growth to unemployment in Muslim countries. The negative coefficients including FDI (-0.031), labor force with Intermediary educational level (-0.022) and population growth (-0.268) assert the unemployment reducing factors. Consequently, the goal of this research, via a literature review, will be to establish the gaps in knowledge regarding the relationship between unemployment and poverty in nations belonging to the OIC in the long-run as influenced by economic growth.