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Pro-poor Growth and Policies: The Asian Experience

Author

Listed:
  • Hafiz A. Pasha

    (Regional Bureau for Asia and the Pacific of the UNDP.)

  • T. Palanivel

    (UNDP's Asia-Pacific Regional Programme on Macroeconomics of Poverty Reduction.)

Abstract

The objective of this paper is to assemble on a systematic basis the available data on Asian countries and then analyse the relationship between growth and poverty reduction in a long-term perspective, as well as the impact of different macroeconomic variables on the intensity of this relationship. The results indicate that there is not only a strong positive relationship between growth and poverty reduction, but also that this relationship is highly variable across countries and time periods. The key macroeconomic determinants of the degree of pro-poor growth appear to be the rates of employment and agricultural growth. Inflation, at least up to a certain rate, does not impact poverty negatively, while the role of exports is essentially indirect through the contribution to the overall rate of economic growth. Examination of the change in policy stance of the Asian countries during the 1990s in relation to the 1980s demonstrates that on balance the mix of policies has not been pro-poor. The apparent sacrifice of growth in pursuit of macroeconomic stability has diminished the impact on poverty reduction. Given the relatively weak trade-off between inflation and growth with regard to the impact on poverty and the fact that inflation rates are currently low in the region, it is argued that countries can be more flexible in their policy stance with regard to the adoption of more growth-oriented as opposed to stabilisation policies. In particular, a case is made for resorting to a more expansionary counter-cyclical fiscal policy, led by higher levels of public investment, supported by appropriate monetary and exchange rate policies. The paper concludes with a detailed description of the policies designed to achieve faster agricultural development and greater employment generation.

Suggested Citation

  • Hafiz A. Pasha & T. Palanivel, 2003. "Pro-poor Growth and Policies: The Asian Experience," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(4), pages 313-348.
  • Handle: RePEc:pid:journl:v:42:y:2003:i:4:p:313-348
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    File URL: http://www.pide.org.pk/pdf/PDR/2003/Volume4/313-348.pdf
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    References listed on IDEAS

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    1. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," World Bank Economic Review, World Bank Group, vol. 11(2), pages 357-382, May.
    2. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    3. Anne Epaulard, 2003. "Macroeconomic Performance and Poverty Reduction," IMF Working Papers 03/72, International Monetary Fund.
    4. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    5. Easterly, William & Fischer, Stanley, 2001. "Inflation and the Poor," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 160-178, May.
    6. Adams, Richard H. Jr., 2003. "Economic growth, inequality, and poverty : findings from a new data set," Policy Research Working Paper Series 2972, The World Bank.
    7. 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.
    8. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
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    Cited by:

    1. Raghbendra Jha & T. Palanivel, 2007. "Resource Augmentation for Meeting the Millennium Development Goals in the Asia Pacific Region," Departmental Working Papers 2007-02, The Australian National University, Arndt-Corden Department of Economics.
    2. Hyun H. Son & Nanak Kakwani, 2006. "Global Estimates of Pro-Poor Growth," Working Papers 31, International Policy Centre for Inclusive Growth.
    3. Arturo Martinez Jr. & Mark Western & Michele Haynes & Wojtek Tomaszewski, 2015. "How Income Segmentation Affects Income Mobility: Evidence from Panel Data in the Philippines," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 2(3), pages 590-608, September.
    4. Mwangi S. Kimenyi, 2005. "Economic Rights, Human Development Effort and Institutions," Working papers 2005-40, University of Connecticut, Department of Economics.
    5. Zaman, Khalid & Khilji, Bashir Ahmad, 2013. "The relationship between growth–inequality–poverty triangle and pro-poor growth policies in Pakistan: The twin disappointments," Economic Modelling, Elsevier, vol. 30(C), pages 375-393.
    6. Alfredo Saad-Filho, 2007. "Life beyond the Washington Consensus: An Introduction to Pro-poor Macroeconomic Policies," Review of Political Economy, Taylor & Francis Journals, vol. 19(4), pages 513-537.
    7. Ogun, T. P., 2010. "Infrastructure and Poverty Reduction: Implications for Urban Development in Nigeria," WIDER Working Paper Series 043, World Institute for Development Economic Research (UNU-WIDER).

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