Social protection for inclusive growth: a tale of two countries Pakistan and Bangladesh

Abstract

PurposeThis paper examines and compares the role of social protection to promote inclusive growth in two countries (once related), Pakistan and Bangladesh, from 1984 to 2020, using annual time series data.Design/methodology/approachThe study used principal component analysis to develop the index of social protection, inclusive growth and macroeconomic stability. It also employed co-integration with impulse response function and fully modified ordinary least squares test for long-run cointegration.FindingsThe key results highlighted that social protection positively promotes inclusive growth in both countries. However, Bangladesh attains a high position in achieving inclusive growth through the mechanism of welfare programs. Findings show that institutional quality, macroeconomic stability and globalization are the positive and significant drivers of inclusive growth in both countries. It also confirms that macroeconomic stability and globalization are contributing more to achieving inclusive growth in Bangladesh as compared to Pakistan.Practical implicationsInstitutions and macroeconomic stability in both countries are critical toward providing a transparent system of welfare schemes to achieve inclusive growth. Shocks to social protection schemes in Pakistan are inconsistent for achieving inclusive growth as compared to Bangladesh.Originality/valueThe study extends the empirical measurement of social protection and inclusive growth while using protracted dimensions and indicators. It further examines and compares the dynamics of social protection programs for inclusive growth in two countries once related. For further originality and reliability, this study checks the robustness of long-run estimates by disaggregating the institutional quality and globalization into their key dimensions.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-07-2023-0548