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Growth, poverty and inequality in Ethiopia: Which way for pro-poor growth?

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Author Info

  • Alemayehu Geda
  • Abebe Shimeles
  • John Weeks

    (University of London, London, UK)

Abstract

The paper examines the pattern of poverty, growth and inequality in Ethiopia in the recent decade. The result shows that growth, to a large extent depends on structural factors such as initial conditions, vagaries of nature, external shocks and peace and stability both in Ethiopia and in the region. Using a rich household panel data, the paper also shows that there is a strong correlation between growth and inequality. In such set up, the effect of implementing a pro-poor growth strategy, compared to allowing the status quo to prevail, can be quite dramatic. On the basis of realistic assumptions, the paper shows that from a baseline in 2000 of a 30 per cent poverty share, over 10 years at growth of 4 per cent per capita, poverty would decline from 44 to 26 per cent for distribution neutral growth (DNG) (i.e. no change in the aggregate income distribution). In contrast, were the growth increment distributed equally across percentiles (equally distributed gains of growth, EDG), the poverty would decline by over half, to 15 per cent, a difference of almost eleven percentage points. Thus, 'distribution matters', even, or especially in a poor country like Ethiopia. On the basis of these results the paper outlines policies that could help to design a sustainable pro-poor growth strategy. Copyright © 2008 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jid.1517
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 21 (2009)
Issue (Month): 7 ()
Pages: 947-970

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Handle: RePEc:wly:jintdv:v:21:y:2009:i:7:p:947-970

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Web page: http://www3.interscience.wiley.com/journal/5102/home

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  1. Ravallion, Martin, 2001. "Growth, inequality, and poverty : looking beyond averages," Policy Research Working Paper Series 2558, The World Bank.
  2. Kakwani, N., 1990. "Poverty And Economic Growth; With Application To Cote D'Ivoire," Papers, New South Wales - School of Economics 90-2, New South Wales - School of Economics.
  3. Kakwani, N., 1990. "Poverty And Economic Growth: With Application To Cote D'Ivoire," Papers, World Bank - Living Standards Measurement 63, World Bank - Living Standards Measurement.
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Cited by:
  1. Geda, Alemayehu & Shimeles, Abebe & Zerfu, Daniel, 2006. "Finance and Poverty in Ethiopia: A Household Level Analysis," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) RP2006/51, World Institute for Development Economic Research (UNU-WIDER).
  2. Stephen C. Smith & Sungil Kwak, 2011. "Regional Agricultural Endowments and Shifts of Poverty Trap Equilibria: Evidence from Ethiopian Panel Data," Working Papers, The George Washington University, Institute for International Economic Policy 2011-01, The George Washington University, Institute for International Economic Policy.
  3. Stephen C. Smith & Sungil Kwak, 2011. "Multidimensional Poverty and Interlocking Poverty Traps: Framework and Application to Ethiopian Household Panel Data," Working Papers, The George Washington University, Institute for International Economic Policy 2011-04, The George Washington University, Institute for International Economic Policy.

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