Global poverty reduction: are we heading in the right direction?

Poverty is now commonly recognised as a multi-dimensional concept, but there is less agreement about whether such recognition matters for poverty reduction policies in practice. This article argues that it does matter, as income is an input measure rather than a welfare outcome, the correlation between income and other aspects of poverty is imperfect and as there are strong complementarties between investment in human development and attaining sustained growth. Poverty measures should clearly be those that focus on the welfare of the poor, but it is often forgotten that many social indicators have a distributional component, just as does income per capita, so that increases do not necessarily correspond to improvements in the well-being of the poor. The record with respect to poverty reduction is uneven and certainly leaves no room for complacency. Although growth is rightly considered a part of any poverty reduction strategy, the agenda should focus more strongly on poverty reduction with growth (and so the distribution of the benefits of growth). Aid can play a role in this process, but only if the donor-based biases which distort aid from its poverty-reducing objective are confronted. Copyright © 1999 John Wiley & Sons, Ltd.