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Role of Growth and Inequality in Explaining Changes in Poverty in Pakistan

Author

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  • Talat Anwar

    (Research Department, State Bank of Pakistan, Karachi and Canadian International Development Agency, Programme Support Unit, Islamabad.)

Abstract

Changes in the extent of poverty are affected not only by growth in the mean income but also by changes in the distribution of income. The effect of these two factors can be separately measured by decomposing the total change in poverty. In this context, this paper uses new tools to quantify relative contribution of growth and inequality using the latest available household survey data. The findings of this paper suggest that the role of inequality remained important in mitigating the adverse effects of growth on poverty during the first period, 1998-99 to 2001-02. Alternatively, the role of growth has been fundamental in reducing absolute poverty in the second period, 2001-02 to 2004-05. Poverty would have been further reduced, had the distribution not worsened during this period. The policy implication is that while pursuit of growth as a strategy is important for poverty reduction in Pakistan, the contribution of redistribution in favour of the poor should not be ignored if the effect of growth on poverty reduction is to be enhanced. Thus, the major challenge is to pursue a poverty reduction strategy that is based on growth with redistribution.

Suggested Citation

  • Talat Anwar, 2010. "Role of Growth and Inequality in Explaining Changes in Poverty in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(1), pages 1-17.
    • Handle: RePEc:pid:journl:v:49:y:2010:i:1:p:1-17
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    File URL: http://www.pide.org.pk/pdf/PDR/2010/Volume1/1-17.pdf
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    References listed on IDEAS

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    Cited by:

    1. Jamal, Haroon, 2014. "Growth and Income Inequality Effects on Poverty: The Case of Pakistan (1988-2011)," MPRA Paper 59897, University Library of Munich, Germany.
    2. Raul Caruso & Antonella Biscione, 2020. "Static and Dynamic Analysis of Poverty in Albania (2007-2016)," Working Papers 1007, European Centre of Peace Science, Integration and Cooperation (CESPIC), Catholic University 'Our Lady of Good Counsel'.
    3. Saqlain Latif Satti & Muhammad Shahid Hassan & Fozia Hayat & Sudharshan Reddy Paramati, 2016. "Economic Growth and Inflow of Remittances: Do They Combat Poverty in an Emerging Economy?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(3), pages 1119-1134, July.
    4. Aadil Hameed Shah & Atta Ullah Khan & Liurong Pan & Asad Amin & Abbas Ali Chandio, 2022. "Reflections of Pro-Poor Growth across Agro-Climatic Zones for Farming and Non-Farming Communities: Evidence from Punjab, Pakistan," IJERPH, MDPI, vol. 19(9), pages 1-16, May.
    5. S. M. Naseem, 2012. "A Review Of Studies On Poverty In Pakistan: Origin, Evolution, Thematic Content And Future Directions," PIDE Books, Pakistan Institute of Development Economics, number 2012:1 edited by Rashid Amjad, October.
    6. Mamoon, Dawood & Hyat, Fozia & Hassan, Shahid, 2018. "Lumping Together Democracy and Dictatorship: Has Macro Dynamics of Poverty Remained Steady in Pakistan," MPRA Paper 87672, University Library of Munich, Germany.
    7. Muhammad Idrees, 2017. "Poverty in Pakistan: A Region-Specific Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 22(2), pages 139-163, July-Dec.
    8. Priyabrata Sahoo & Debolina Biswas & Saswata Guha Thakurata, 2023. "Is Growth Pro-poor Among the States of India? A Poverty Decomposition Exercise During the 2000s," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 165(1), pages 107-133, January.
    9. Akhtar Gul & Fatima Zahra & Anum Iqbal & Tanbila Ghafoor & Musaddiq Hussain, 2020. "Linkage Between Poverty, Inequality, and Income Distribution: A Case on Bannu District, Pakistan," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(4), pages 330-339, December.
    10. Antonella Biscione & Dorothée Boccanfuso & Raul Caruso, 2020. "A Hypothesis on Poverty Change in Albania (2007-2016)," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 128(3), pages 301-320.

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    More about this item

    Keywords

    Poverty; Inequality; Economic Growth; Pakistan;
    All these keywords.

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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