Analysis of the Impact of Poverty on Economic Growth: A Panel Study for El Salvador, Honduras, and Costa Rica (2000-2020)

Abstract

This study analyzes the relationship between poverty and economic growth in Honduras, El Salvador, and Costa Rica during the period 2000-2023, using panel data methodology and STATA software for econometric analysis. The main objective is to analyze how the poverty variable might affect the economic growth of these three countries. The analysis through panel data allows for controlling unobservable heterogeneities between countries and over time. The results reveal that both poverty and inflation are significant variables that negatively affect economic growth in the three countries. Although extreme poverty does not show a statistically significant effect in the short term, it is suggested to monitor it closely due to its potential long-term effects on economic performance. Furthermore, the study highlights that inflation has a substantial negative impact on economic growth, indicating the need for policies that not only address poverty but also control inflation. The results point out that managing macroeconomic conditions, especially price stability and social improvements, is essential for fostering stable and sustainable economic growth. This study underscores the importance of integrated policies aimed at reducing poverty and controlling inflation to promote inclusive and sustainable economic growth in Central America.Economic growth