This paper looks into the interrelation between economic
growth, inequality, and poverty. Using the notion of pro-poor growth, we
examine the extent to which the poor benefit from economic growth.
First, various approaches to defining and measuring propoor growth are
scrutinised using a variety of criteria. It is argued that the
satisfaction of a monotonicity axiom is a key criterion for measuring
pro-poor growth. The monotonicity axiom sets out a condition that the
proportional reduction in poverty is a monotonically increasing function
of the pro-poor growth measure. The paper proposes a pro-poor growth
measure that satisfies the monotonicity criterion. This measure is
called a ‘poverty equivalent growth rate’, which takes into account both
the magnitude of growth and how the benefits of growth are distributed
to the poor and the non-poor. As the new measure satisfies the criterion
of monotonicity, it is indicative that to achieve rapid poverty
reduction, the poverty equivalent growth rate—rather than the actual
growth rate—ought to be maximised. The methodology developed in the
paper is then applied to three Asian countries, namely, the Republic of
Korea, Thailand, and Vietnam.
This paper proposes a new type of growth rate, called the "poverty equivalent growth rate" (PEGR), which takes into account both the growth rate in mean income and how the benefits of growth are distributed between the poor and the non-poor. The proposed measure satisfies a basic requirement that the proportional reduction in poverty is a monotonically increasing function of the PEGR. Thus, maximizing the PEGR implies a maximum reduction in poverty. The paper demonstrates that the magnitude of PEGR determines the pattern of growth: whether growth is pro-poor in relative or absolute sense or is "poverty reducing" pro-poor. The pattern of growth has been analyzed for Brazil using the National Household Survey (PNAD) covering the period 1995-2005.
The m ain objective of the present paper is to present a crosscountry analysis of pro-poor grow th in 80 countries in 237 grow th spells during the period 1984-2001. To achieve this objective, the paper proposes a new m easure of pro-poor grow th that captures gains and losses of grow th rates due to changes in the distribution of consum ption. The gains im ply propoor grow th, w hile the losses im ply anti-poor grow th. The statistical test carried out in the paper show s that regional location of countries has a significant association w ith the propoorness of grow th. The paper also attem pts to test for the association betw een grow th patterns and certain variables that the literature has identified as significant determ inants of grow th and inequality. O ut of m any variables, the paper focuses on four, nam ely, inflation, the share of agriculture in GDP, openness to trade, and the rule of law .
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