Spatial spillover effect of multi-dimensional poverty in Malawi

Abstract High and persistent levels of multidimensional poverty pose a significant challenge in Malawi. Finding effective methods to eradicate poverty in all its forms remains a key policy concern. Economic and human geographical theories suggest that poverty persists due to spatial dependence and the resulting neighbourhood or spillover effects; the level of multidimensional poverty in one area is affected by that in neighbouring areas. This study investigated the spatial patterns of multidimensional poverty in Malawi using data from the 2019 Integrated Household Survey. Using the Alkire-Foster method, a local multidimensional poverty index was constructed based on the needs and characteristics of Malawi. This research employs a spatial lag model to determine whether poverty levels in a cluster influence neighbouring areas. Results show that as of 2019/2020, 61% of individuals in Malawi lived in multidimensional poverty. On average, those affected experienced deprivation in 51% of the weighted indicators. The Multidimensional Poverty Index (MPI) was lower in urban areas (0.148) compared to rural areas (0.342). Key findings reveal the significant spatial dependence of multidimensional poverty, indicating that poverty clusters geographically. Importantly, increased education in one area is correlated with reduced poverty in surrounding areas. Additionally, climate shocks do not only increase multidimensional poverty in the directly impacted clusters but they have ripple effects on neibhouring clusters. These results suggest that targeted anti-poverty interventions, particularly educational investments in poverty hotspots, could effectively reduce poverty in Malawi.