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Inequality and the Dynamics of Poverty and Growth

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Author Info
Ali A. Ali
Ibrahim A. Elbadawi
Abstract

This paper models the dynamic interactions between growth and distribution in the analysis of the behavior of poverty over time. The model permits formal analysis of the factors that led to the growth collapse as well as the rise in poverty in Africa and other developing regions, except Asia, during 1975-96 period. Using indicators of average country performance during this period-- in terms of the rate of acceleration of growth, changes in poverty and extent of inequality—the model suggests tentative strategies for dealing with poverty. The main policy recommendation of this analysis is that, for the majority of countries—36 out of 47—any serious strategy for poverty reduction must include both policies for accelerating growth as well as measures for effecting more equitable income distribution. Moreover, the latter must be sufficiently deep either to shake-off the "transitional", though lingering, "low equilibrium trap" that characterizes some economies; or to more others from the "bad" equilibrium of stationary, but high, poverty.

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Paper provided by Center for International Development at Harvard University in its series CID Working Papers with number 32.

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Date of creation: Dec 1999
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Handle: RePEc:wop:cidhav:32

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Find related papers by JEL classification:
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
D30 - Microeconomics - - Distribution - - - General
O20 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - General

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.:

  1. Minami, Ryoshin, 1998. "Economic Development and Income Distribution in Japan: An Assessment of the Kuznets Hypothesis," Cambridge Journal of Economics, Oxford University Press, vol. 22(1), pages 39-58, January.
  2. Ahluwalia, Montek S. & Carter, Nicholas G. & Chenery, Hollis B., 1979. "Growth and poverty in developing countries," Journal of Development Economics, Elsevier, vol. 6(3), pages 299-341, August. [Downloadable!] (restricted)
  3. Aghion, Philippe & Bolton, Patrick, 1997. "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, Blackwell Publishing, vol. 64(2), pages 151-72, April. [Downloadable!] (restricted)
  4. Domowitz, Ian & Elbadawi, Ibrahim, 1987. "An error-correction approach to money demand : The case of Sudan," Journal of Development Economics, Elsevier, vol. 26(2), pages 257-275, August. [Downloadable!] (restricted)
  5. Li, Hongyi & Zou, Heng-fu, 1998. "Income Inequality Is Not Harmful for Growth: Theory and Evidence," Review of Development Economics, Blackwell Publishing, vol. 2(3), pages 318-34, October. [Downloadable!] (restricted)
  6. Dani Rodrik, 1998. "Where Did All The Growth Go? External Shocks, Social Conflict, and Growth Collapses," NBER Working Papers 6350, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Easterly, William & Loayza, Norman & Montiel, Peter, 1997. "Has Latin America's post-reform growth been disappointing?," Journal of International Economics, Elsevier, vol. 43(3-4), pages 287-311, November. [Downloadable!] (restricted)
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  8. Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 459-483, December. [Downloadable!] (restricted)
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  9. David E. Bloom & Jeffrey D. Sachs, 1998. "Geography, Demography, and Economic Growth in Africa," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1998-2), pages 207-296. [Downloadable!]
  10. Alesina, Alberto & Rodrik, Dani, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 465-90, May. [Downloadable!] (restricted)
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  11. Daron Acemoglu & James A. Robinson, 2000. "Why Did The West Extend The Franchise? Democracy, Inequality, And Growth In Historical Perspective," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1167-1199, November. [Downloadable!] (restricted)
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  12. Chen, Shaohua & Datt, Gaurav & Ravallion, Martin, 1994. "Is Poverty Increasing in the Developing World?," Review of Income and Wealth, Blackwell Publishing, vol. 40(4), pages 359-76, December.
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  13. Bourguignon, F. & Verdier, T., 1997. "Oligarchy, Democracy, Inequality and Growth," DELTA Working Papers 97-10, DELTA (Ecole normale supérieure).
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  14. Torsten Persson & Guido Tabellini, 1991. "Is Inequality Harmful for Growth? Theory and Evidence," NBER Working Papers 3599, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December. [Downloadable!] (restricted)
  16. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October. [Downloadable!] (restricted)
    Other versions:
  17. Banerjee, Abhijit & Newman, Andrew F, 1998. "Information, the Dual Economy, and Development," Review of Economic Studies, Blackwell Publishing, vol. 65(4), pages 631-53, October. [Downloadable!] (restricted)
  18. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, Oxford University Press, vol. 10(3), pages 565-91, September.
  19. Anand, Sudhir & Kanbur, S. M. R., 1993. "Inequality and development A critique," Journal of Development Economics, Elsevier, vol. 41(1), pages 19-43, June. [Downloadable!] (restricted)
  20. Bruno, Michael & Ravallion, Martin & Squire, Lyn, 1996. "Equity and growth in developing countries : old and new perspectives on the policy issues," Policy Research Working Paper Series 1563, The World Bank. [Downloadable!]
Full references

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. Lelli, Sara, 2004. "What Money Can't Buy: The Relevance of Income Redistribution for Functioning Levels," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  2. Alexander Cotte Poveda, 2006. "Crecimiento, Desigualdad Y Pobreza: Un Análisis De La Violencia En Colombia," SERIE DE DOCUMENTOS EN ECONOMÍA Y VIOLENCIA 002233, CENTRO DE INVESTIGACIONES EN VIOLENCIA,INSTITUCIONES Y DESARROLLO ECONÓMICO (VIDE). [Downloadable!]
  3. Ali AbdelGadir Ali, . "Internal Substainability and Economic Growth in The Arab States," API-Working Paper Series 0102, Arab Planning Institute - Kuwait, Information Center. [Downloadable!]
  4. Janvier D. Nkurunziza & Floribert Ngaruko, 2004. "Explaining Growth in Burundi: 1960-2000," Macroeconomics 0409012, EconWPA. [Downloadable!]
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