Poverty Reduction with Growth and Redistribution

Abstract

In the late 1990s the bilateral and multilateral development agencies placed increasing emphasis on poverty reduction in developing countries. This led to the establishment by the United Nations of the ‘International Development Targets’ for poverty reduction. The target of poverty reduction might be achieved through faster economic growth alone, through redistribution, or through a combination of the two. This article presents an analytical framework to assess the effectiveness of growth and redistribution for poverty reduction. It concludes that redistribution, either of current income or the growth increment of income, is more effective in reducing poverty for a majority of countries than growth alone.

Roles of income and equality in poverty reduction: recent cross‐country evidence

“…Despite the lack of a direct comparison of the roles of income and inequality on the basis of sizable recent cross-country data, the importance of lower inequality has been suggested by several researchers. More notable among these are White (2001) and Dagdeviren et al (2002). 4 Limitations of most types of redistributive efforts are well known, and have been noted by several scholars, including Agenor (2005, p. 423), Bourguignon (2003, p. 21) and Fields (2001, pp.…”

Roads out of poverty? Assessing the links between aid, public investment, growth, and poverty reduction

“…Growth (in income) is thus implicitly assumed to be distribution neutral. The caveat, of course, is that to the extent that distribution changes, growth may not benefit automatically the poor (see Dagdeviren et al, 2002).…”

How best to link poverty reduction and debt sustainability in IMF–World Bank models?

“…3. Dagdeviren et al (2002) find that redistribution, either of current income or of the growth increment of income, is more effective in reducing poverty for a majority of countries than growth alone. 4.…”