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Pro-poor Growth: Concepts and Measurement with Country Case Studies

  • Nanak Kakwani

    (International Poverty Center, United Nations Development Programme.)

  • Hyun H. Son

    (Departmetn of Economics, Macquarie University, Sydney, Australia.)

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    This paper looks into the interrelation between economic growth, inequality, and poverty. Using the notion of pro-poor growth, we examine the extent to which the poor benefit from economic growth. First, various approaches to defining and measuring propoor growth are scrutinised using a variety of criteria. It is argued that the satisfaction of a monotonicity axiom is a key criterion for measuring pro-poor growth. The monotonicity axiom sets out a condition that the proportional reduction in poverty is a monotonically increasing function of the pro-poor growth measure. The paper proposes a pro-poor growth measure that satisfies the monotonicity criterion. This measure is called a ‘poverty equivalent growth rate’, which takes into account both the magnitude of growth and how the benefits of growth are distributed to the poor and the non-poor. As the new measure satisfies the criterion of monotonicity, it is indicative that to achieve rapid poverty reduction, the poverty equivalent growth rate—rather than the actual growth rate—ought to be maximised. The methodology developed in the paper is then applied to three Asian countries, namely, the Republic of Korea, Thailand, and Vietnam.

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    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 42 (2003)
    Issue (Month): 4 ()
    Pages: 417-444

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    Handle: RePEc:pid:journl:v:42:y:2003:i:4:p:417-444
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    1. Fields, Gary S, 1989. "Changes in Poverty and Inequality in Developing Countries," World Bank Research Observer, World Bank Group, vol. 4(2), pages 167-85, July.
    2. Bhagwati, Jagdish N., 1988. "Poverty and public policy," World Development, Elsevier, vol. 16(5), pages 539-555, May.
    3. Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
    4. Anand, Sudhir & Kanbur, S. M. R., 1993. "The Kuznets process and the inequality--development relationship," Journal of Development Economics, Elsevier, vol. 40(1), pages 25-52, February.
    5. Kakwani, Nanak, 1993. "Poverty and Economic Growth with Application to Cote d'Ivoire," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(2), pages 121-39, June.
    6. Adelman, Irma, 1975. "Development Economics-A Reassessment of Goals," American Economic Review, American Economic Association, vol. 65(2), pages 302-09, May.
    7. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-46, March.
    8. Ahluwalia, Montek S., 1976. "Inequality, poverty and development," Journal of Development Economics, Elsevier, vol. 3(4), pages 307-342, December.
    9. Ram, Rati, 1988. "Economic development and income inequality: Further evidence on the U-curve hypothesis," World Development, Elsevier, vol. 16(11), pages 1371-1376, November.
    10. Ravallion, Martin & Shaohua Chen, 2001. "Measuring pro-poor growth," Policy Research Working Paper Series 2666, The World Bank.
    11. Ravallion, Martin, 2001. "Growth, inequality, and poverty : looking beyond averages," Policy Research Working Paper Series 2558, The World Bank.
    12. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
    13. Ravallion, Martin, 2004. "Pro-poor growth : A primer," Policy Research Working Paper Series 3242, The World Bank.
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