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

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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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    1. Ehtisham Ahmad & Stephen Ludlow, 1989. "Poverty, Inequality and Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 28(4), pages 831-850.
    2. AsBJORN BERGAN, 1967. "Personal Income Distribution and Personal Savings in Pakistan 1963/64," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 7(2), pages 160-212.
    3. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    4. G. M. Arif & Hina Nazli & Rashida Haq, 2000. "Rural Non-agriculture Employment and Poverty in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 1089-1110.
    5. Tilat Anwar, 1996. "Structural Adjustment and Poverty: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 911-926.
    6. Zafar Mahmood, 1984. "Income Inequality in Pakistan. An Analysis of Existing Evidence," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 23(2-3), pages 365-379.
    7. Mohammad, Irfan & Amjad, Rashid, 1994. "Poverty in rural Pakistan," MPRA Paper 38335, University Library of Munich, Germany.
    8. Sohail J. Malik & Muhammad Hussain & Nasim S. Shirazi, 1994. "Role of Infaq in Poverty Alleviation in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 33(4), pages 935-952.
    9. S.M. Naseem, 1973. "Mass Poverty in Pakistan. Some Preliminary Findings," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 12(4), pages 317-360.
    10. Rashid Amjad & A.R. Kemal, 1997. "Macroeconomic Policies and their Impact on Poverty Alleviation in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(1), pages 39-68.
    11. Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, vol. 38(2), pages 275-295, April.
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    1. repec:lje:journl:v:22:y:2017:i:2:p:139-163 is not listed on IDEAS

    More about this item

    Keywords

    Poverty; Inequality; Economic Growth; Pakistan;

    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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