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When is Growth Pro-Poor? Cross-Country Evidence

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Aart Kraay

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Abstract

Growth is pro-poor if the poverty measure of interest falls. This implies three potential sources of pro-poor growth: (a) a high rate of growth of average incomes; (b) a high sensitivity of poverty to growth in average incomes; and (c) a poverty-reducing pattern of growth in relative incomes. I empirically decompose changes in poverty in a large sample of developing countries into these components. In the medium run, most of the variation in changes in poverty is due to growth, suggesting that policies and institutions that promote broad-based growth should be central to pro-poor growth. Most of the remainder is due to poverty-reducing patterns of growth in relative incomes, rather than differences in the sensitivity of poverty to growth in average incomes. Cross-country evidence provides little guidance on policies and institutions that promote these other sources of pro-poor growth.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/47.

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Length: 34 pages
Date of creation: 01 Apr 2004
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Handle: RePEc:imf:imfwpa:04/47

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Keywords: Poverty ; Poverty reduction ; Income distribution ; Economic growth ; Developing countries ;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  3. Angus Deaton, 2003. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," NBER Working Papers 9822, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Mattias Lundberg & Lyn Squire, 2003. "The simultaneous evolution of growth and inequality," Economic Journal, Royal Economic Society, vol. 113(487), pages 326-344, 04. [Downloadable!] (restricted)
  5. Branko Milanovic, 2003. "Can We Discern The Effect Of Globalization On Income Distribution? Evidence From Household Surveys," HEW 0310002, EconWPA. [Downloadable!]
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  6. Sarabia, J. -M. & Castillo, Enrique & Slottje, Daniel J., 1999. "An ordered family of Lorenz curves," Journal of Econometrics, Elsevier, vol. 91(1), pages 43-60, July. [Downloadable!] (restricted)
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  9. Kakwani, Nanak, 1993. "Poverty and Economic Growth with Application to Cote d'Ivoire," Review of Income and Wealth, Blackwell Publishing, vol. 39(2), pages 121-39, June.
  10. Leamer, Edward E. & Maul, Hugo & Rodriguez, Sergio & Schott, Peter K., 1999. "Does natural resource abundance increase Latin American income inequality?," Journal of Development Economics, Elsevier, vol. 59(1), pages 3-42, June. [Downloadable!] (restricted)
  11. Dollar, David & Kraay, Aart, 2002. " Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September. [Downloadable!] (restricted)
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  12. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, Oxford University Press, vol. 11(2), pages 357-82, May.
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  13. Easterly, William, 1999. " Life during Growth," Journal of Economic Growth, Springer, vol. 4(3), pages 239-76, September. [Downloadable!] (restricted)
  14. Ravallion, Martin, 2001. "Inequality convergence," Policy Research Working Paper Series 2645, The World Bank. [Downloadable!]
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  15. Milanovic, Branko, 2002. "Can we discern the effect of globalization on income distribution? evidence from household budget surveys," Policy Research Working Paper Series 2876, The World Bank. [Downloadable!]
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  16. Spilimbergo, Antonio & Londono, Juan Luis & Szekely, Miguel, 1999. "Income distribution, factor endowments, and trade openness," Journal of Development Economics, Elsevier, vol. 59(1), pages 77-101, June. [Downloadable!] (restricted)
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  17. Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998. "Explaining International and Intertemporal Variations in Income Inequality," Economic Journal, Royal Economic Society, vol. 108(446), pages 26-43, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Resnick, Danielle & Birner, Regina, 2006. "Does good governance contribute to pro-poor growth?: a review of the evidence from cross-country studies," DSGD discussion papers 30, International Food Policy Research Institute (IFPRI). [Downloadable!]
  2. Jean-Pierre Lachaud, 2006. "La mesure de la croissance pro-pauvres en Afrique : espace de l’utilité ou des capacités ? Analyse comparative appliquée au Burkina Faso," Documents de travail 122, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV. [Downloadable!]
  3. Rashida Haq & Uzma Zia, 2009. "Does Governance Contribute to Pro-poor Growth? Evidence from Pakistan," PIDE-Working Papers 2009:52, Pakistan Institute of Development Economics. [Downloadable!]
  4. Rashida Haq & Uzma Zia, 2006. "Governance and Pro-poor Growth: Evidence from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 761-776. [Downloadable!]
  5. Raghuram Rajan & Arvind Subramanian, 2005. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," IMF Working Papers 05/127, International Monetary Fund. [Downloadable!]
    Other versions:
  6. Michael Clemens & Charles Kenny & Todd Moss, 2004. "The Trouble with the MDGs: Confronting Expectations of Aid and Development Success," Development and Comp Systems 0405011, EconWPA. [Downloadable!]
    Other versions:
  7. Gonzalo Salinas & Markus Haacker, 2006. "HIV/AIDS: The Impact on Poverty and Inequality," IMF Working Papers 06/126, International Monetary Fund. [Downloadable!]
  8. Essama-Nssah, B., 2004. "A unified framework for pro-poor growth analysis," Policy Research Working Paper Series 3397, The World Bank. [Downloadable!]
  9. Leandro Prados de la Escosura, 2005. "Growth, Inequality, And Poverty In Latin America: Historical Evidence, Controlled Conjectures," Working Papers in Economic History wh054104, Universidad Carlos III, Departamento de Historia Económica e Instituciones. [Downloadable!]
  10. Resnick, Danielle & Birner, Regina, 2005. "Does Good Governance Contribute to Pro-poor Growth?: A Conceptual Framework and Empirical Evidence from Cross-Country Studies," Proceedings of the German Development Economics Conference, Kiel 2005 5, Verein für Socialpolitik, Research Committee Development Economics. [Downloadable!]
  11. Cristina Cattaneo, 2008. "International Migration, the Brain Drain and Poverty:A Cross Country Analysis," CESPRI Working Papers 212, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Jan 2008. [Downloadable!]
    Other versions:
  12. Kakwani, Nanak & Son, Hyun H., 2006. "Pro-Poor Growth: The Asian Experience," Working Papers RP2006/56, World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  13. Philip Arestis, Asena Caner, 2004. "Financial Liberalization and Poverty: Channels of Influence," Economics Working Paper Archive 411, Levy Economics Institute, The. [Downloadable!]
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