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Growth, Income Distribution, and Poverty: A Review

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  • Bigsten, Arne
  • Levin, Jorgen

Abstract

This paper reviews the recent literature dealing with the relationships between economic growth, income distribution, and poverty. This generally fails to find any systematic pattern of change in income distribution during recent decades. Neither does it find any systematic link from fast growth to increasing inequality. Some recent empirical evidence has tended to confirm the negative impact of inequality on growth, on the other hand. Others have found that the level of initial income inequality is not a robust explanatory factor of growth, though high inequality in the distribution of assets, such as land, has a significantly negative effect on growth. Possible channels are credit rationing, reduced possibilities for participation in the political process, and social conflicts. Among the strategic elements that contributed to reduced poverty are: an outward-oriented strategy of export-led growth, based on labour-intensive manufacturing; agricultural and rural development, with encouragement of new technologies; investment in physical infrastructure and human capital; efficient institutions that provide the right set of incentives to farmers and entrepreneurs; and social policies to promote health, education, and social capital, as well as safety nets to protect the poor. Countries that have been successful in terms of economic growth are also very likely to be successful in reducing poverty. Poverty can be reduced if there is sufficient economic growth. Growth can be substantial if the policy and institutional environment is right.

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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number UNU-WIDER Research Paper DP2001/129.

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Length: 28 pages
Date of creation: 2001
Date of revision:
Handle: RePEc:unu:wpaper:dp2001-129

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Keywords: Pro-poor growth; Income distribution; Poverty; Survey;

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Cited by:
  1. Digdowiseiso, Kumba, 2009. "Education inequality, economic growth, and income inequality: Evidence from Indonesia, 1996-2005," MPRA Paper 17792, University Library of Munich, Germany.
  2. Svedberg, Peter, 2002. "Income Distribution Across Countries: How is it Measured and What Do the Results Show?," Seminar Papers 698, Stockholm University, Institute for International Economic Studies.
  3. Dorothée BOCCANFUSO & Tambi Samuel KABORE, 2004. "Macroeconomic Growth, Sectoral Quality Of Growth And Poverty In Developing Countries: Measure And Application To Burkina Faso," Cahiers de recherche 04-07, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
  4. Majid Sameti & Leila Rafie, 2010. "Interaction of Income Distribution, Taxes and Economic Growth (The Case of Iran and Some Selected East Asian Countries)," Iranian Economic Review, Economics faculty of Tehran university, vol. 15(1), pages 67-81, winter.
  5. Bigsten, Arne & Kebede, Bereket & Shimeles, Abebe & Taddesse , Mekonnen, 2002. "Growth and Poverty Reduction in Ethiopia: Evidence from Household Panel Surveys," Working Papers in Economics 65, University of Gothenburg, Department of Economics.
  6. Samuel Tambi Kaboré, 2004. "Qualité de la croissance économique et pauvreté dans les pays en développement : mesure et application au Burkina Faso," Revue d’économie du développement, De Boeck Université, vol. 18(2), pages 37-63.
  7. Dorothée Boccanfuso & Samuel Tambi Kaboré, 2004. "Croissance, inégalité et pauvreté dans les années quatre-vingt-dix au Burkina Faso et au Sénégal," Revue d’économie du développement, De Boeck Université, vol. 18(2), pages 9-35.
  8. Bigsten, Arne & Durevall, Dick, 2004. "Kenya’s Development Path and Factor Prices 1964-2000," Working Papers in Economics 142, University of Gothenburg, Department of Economics.

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