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Efficiency, Equity and Poverty Alleviation: Policy Issues in Less Developed Countries

  • Bardhan, Pranab

In this paper we start by noting that policies that help growth by improving allocational efficiency may also help the poor. We then go on to consider cases where in view of serious agency costs and coordination problems (particularly involving processes in credit and insurance markets) there may be a great deal of scope for trying redistributive projects which at the same time enhance productive efficiency, contrary to the message of efficiency-equity trade-off central to mainstream policy economics. In this context we discuss the efficiency effects of asset distribution programs like land reform. We then examine the merits and costs of targeting transfers aimed at improving their cost-effectiveness, including issues of self-selection by the poor and of targeting disadvantaged groups and backward areas. Finally, we discuss governance structures and focus on the role of self-governing institutions at the local level in improving efficiency and equity in poverty alleviation.

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Paper provided by Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley in its series Center for International and Development Economics Research, Working Paper Series with number qt3jq4h9sc.

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Date of creation: 01 Mar 1996
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Handle: RePEc:cdl:ciders:qt3jq4h9sc
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  1. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  2. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-98, April.
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