The relationship between growth–inequality–poverty triangle and pro-poor growth policies in Pakistan: The twin disappointments

The objective of the study is to examine the relationship between growth, inequality and poverty in the context of rural, urban and national levels. Further, this study evaluates pro-poor growth policies in Pakistan during the period of 1964–2011. The regression model encompassing the impact of economic growth and inequality on poverty reflects that a 1% increase in income while keeping the distribution constant reduces poverty around 0.162% in rural, 0.256% in urban, 0.471% in national pooled and 0.276% in national weighted regression. An increase in Gini coefficient while holding the income constant tends to increase poverty in the national weighted by 2.641%, and in the national pooled around 1.721% respectively. Subsequently, at urban and rural regions, it creates proportionally more poor households in the urban areas (elasticity 1.231) than in the rural areas (elasticity 0.928). The study measures pro-poor growth index that captures gains and losses of growth rates due to changes in the distribution of consumption. The gains imply pro-poor growth, while the losses imply anti-poor growth. Total growth spells in this study are 180 including 20 surveys for rural, 20 surveys for urban and 20 surveys for overall Pakistan. However, the study used three different poverty measures i.e., household count (HHC), poverty gap (PG) and squared poverty gap (SPG), evaluating 60 surveys for each poverty measure. The results conclude that out of the 180 growth spells, 63 growth spells had negative growth rates and 117 spells had positive growth rates. Of the 117 spells when growth rates were positive, growth was pro-poor in 64 cases and anti-poor in 53 cases. In 25 out of 63 spells of negative growth rates, the poor suffered proportionally a greater decline in their consumption compared to the non-poor. Thus, growth processes have not generally been favorable to the poor.