Does food inflation exacerbate poverty in the Arab world? Assessing the impact of rural development and institutional quality

Rising food prices continue to threaten economic stability and social well-being across the Arab world. This study investigates how food inflation influences poverty levels in 14 Arab countries from 2001 to 2020, with a focus on the moderating roles of rural development and institutional quality. Utilizing panel econometric models, including the panel corrected standard errors (PCSE) method, the study identifies three core insights. First, food inflation significantly increases poverty, especially in rural areas. Second, strong rural development can lessen the poverty-inducing effects of rising food prices. Third, higher institutional quality—characterized by good governance, effective regulations, and low corruption—buffers the inflation-poverty relationship. These findings emphasize the urgency of strengthening rural economies and governance systems as part of poverty-reduction strategies across the Arab region.

Keywords: Food inflation, Poverty, Rural development, Institutional quality, Arab world, Economic vulnerability, Social protection

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