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Growth, poverty and inequality in Ethiopia: Which way for pro-poor growth?

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  • Alemayehu Geda
  • Abebe Shimeles
  • John Weeks

    (University of London, London, UK)

Abstract

The paper examines the pattern of poverty, growth and inequality in Ethiopia in the recent decade. The result shows that growth, to a large extent depends on structural factors such as initial conditions, vagaries of nature, external shocks and peace and stability both in Ethiopia and in the region. Using a rich household panel data, the paper also shows that there is a strong correlation between growth and inequality. In such set up, the effect of implementing a pro-poor growth strategy, compared to allowing the status quo to prevail, can be quite dramatic. On the basis of realistic assumptions, the paper shows that from a baseline in 2000 of a 30 per cent poverty share, over 10 years at growth of 4 per cent per capita, poverty would decline from 44 to 26 per cent for distribution neutral growth (DNG) (i.e. no change in the aggregate income distribution). In contrast, were the growth increment distributed equally across percentiles (equally distributed gains of growth, EDG), the poverty would decline by over half, to 15 per cent, a difference of almost eleven percentage points. Thus, 'distribution matters', even, or especially in a poor country like Ethiopia. On the basis of these results the paper outlines policies that could help to design a sustainable pro-poor growth strategy. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Alemayehu Geda & Abebe Shimeles & John Weeks, 2009. "Growth, poverty and inequality in Ethiopia: Which way for pro-poor growth?," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(7), pages 947-970.
  • Handle: RePEc:wly:jintdv:v:21:y:2009:i:7:p:947-970
    DOI: 10.1002/jid.1517
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    File URL: http://hdl.handle.net/10.1002/jid.1517
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    References listed on IDEAS

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    1. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    2. Kakwani, N., 1990. "Poverty And Economic Growth; With Application To Cote D'Ivoire," Papers 90-2, New South Wales - School of Economics.
    3. Kakwani, N., 1990. "Poverty And Economic Growth: With Application To Cote D'Ivoire," Papers 63, World Bank - Living Standards Measurement.
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    Citations

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    Cited by:

    1. Stephen C. Smith & Sungil Kwak, 2011. "Multidimensional Poverty and Interlocking Poverty Traps: Framework and Application to Ethiopian Household Panel Data," Working Papers 2011-04, The George Washington University, Institute for International Economic Policy.
    2. Stephan Klasen & Nathalie Scholl & Rahul Lahoti & Sophie Ochmann & Sebastian Vollmer, 2016. "Inequality – Worldwide Trends and Current Debates," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 209, Courant Research Centre PEG.
    3. Urquía-Grande, Elena & Rubio-Alcocer, Antonio, 2015. "Agricultural infrastructure donation performance: Empirical evidence in rural Ethiopia," Agricultural Water Management, Elsevier, vol. 158(C), pages 245-254.
    4. Shinkai, Naoko, 2016. "Examination of Poverty in Northern Mozambique: A Comparison of Social and Economic Dimensions," Working Papers 133, JICA Research Institute.
    5. Sungil Kwak & Stephen C. Smith, 2013. "Regional Agricultural Endowments and Shifts of Poverty Trap Equilibria: Evidence from Ethiopian Panel Data," Journal of Development Studies, Taylor & Francis Journals, vol. 49(7), pages 955-975, July.
    6. Bethlehem A. Argaw, 2017. "Regional inequality of economic outcomes and opportunities in Ethiopia: A tale of two periods," WIDER Working Paper Series 118, World Institute for Development Economic Research (UNU-WIDER).
    7. Geda, Alemayehu & Shimeles, Abebe & Zerfu, Daniel, 2006. "Finance and Poverty in Ethiopia: A Household Level Analysis," WIDER Working Paper Series 051, World Institute for Development Economic Research (UNU-WIDER).
    8. Mulugeta Tesfay, 2015. "Measuring Total Factor Productivity for Ethiopia: Regression Based Growth Accounting The Case of the Post 1991 Period," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(12), pages 587-604, December.
    9. Abro, Zewdu Ayalew & Alemu, Bamlaku Alamirew & Hanjra, Munir A., 2014. "Policies for Agricultural Productivity Growth and Poverty Reduction in Rural Ethiopia," World Development, Elsevier, vol. 59(C), pages 461-474.
    10. Lawrence Haddad, 2015. "Equity: Not Only for Idealists," Development Policy Review, Overseas Development Institute, vol. 33(1), pages 5-13, January.

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