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The growth elasticity of poverty reduction : explaining heterogeneity across countries and time periods

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  • François Bourguignon

Abstract

An identity links the rate of economic growth, the speed of poverty reduction and changes in the distribution of income during some time period in a given country. A few authors used that identity to understand the causes for observed changes in poverty and to identify the exact role of economic growth in poverty reduction. Yet, many empirical cross-country studies of the relationship between growth and poverty are based on linear regression models that are ill specified because they ignore that identity. This paper provides approximations that permit doing much better than these linear models. In particular, it gives closed-form solutions under the assumption that the underlying distribution of income is Log-normal. The second part of the paper analyzes the quality of these approximations in a sample of actual growth spells in developing countries. It turns out that the discrepancy between empirical and theoretical growth elasticities of poverty amounts to much less than 50 per cent and is mostly explained by distributional changes.

Suggested Citation

  • François Bourguignon, 2002. "The growth elasticity of poverty reduction : explaining heterogeneity across countries and time periods," DELTA Working Papers 2002-03, DELTA (Ecole normale supérieure).
  • Handle: RePEc:del:abcdef:2002-03
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    Cited by:

    1. Stephan Klasen & Simon Lange, 2011. "Getting Progress Right: Measuring Progress Towards the MDGs Against Historical Trends," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 87, Courant Research Centre PEG, revised 20 Feb 2012.
    2. Patrick GUILLAUMONT, 2009. "Aid effectiveness for poverty reduction: macroeconomic overview and emerging issues," Working Papers P05, FERDI.
    3. Augustin Kwasi Fosu, 2009. "Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 726-745.
    4. Vincenzo Lombardo, 2011. "Growth and Inequality Effects on Poverty Reduction in Italy," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 241-280.
    5. Christiaensen, Luc & Demery, Lionel & Kuhl, Jesper, 2011. "The (evolving) role of agriculture in poverty reduction--An empirical perspective," Journal of Development Economics, Elsevier, vol. 96(2), pages 239-254, November.
    6. Hajo Holzmann & Sebastian Vollmer & Julian Weisbrod, 2007. "Perspectives on the World Income Distribution - Beyond Twin Peaks Towards Welfare Conclusions," Ibero America Institute for Econ. Research (IAI) Discussion Papers 158, Ibero-America Institute for Economic Research.
    7. Thomas Groll & Peter J. Lambert, 2013. "The Pro-Poorness, Growth and Inequality Nexus: Some Findings From a Simulation Study," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 776-784, December.
    8. Dorothée Boccanfuso & Jean Bosco Ki & Caroline Ménard, 2009. "Pro-Poor Growth Measurements in a Multidimensional Model: A Comparative Approach," Cahiers de recherche 09-22, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    9. Nissanke, Machiko & Thorbecke, Erik, 2006. "A Quest for Pro-Poor Globalization," WIDER Working Paper Series 046, World Institute for Development Economic Research (UNU-WIDER).
    10. Kalwij, Adriaan & Verschoor, Arjan, 2005. "A Decomposition of Poverty Trends across Regions: The Role of Variation in the Income and Inequality Elasticities of Poverty," WIDER Working Paper Series 036, World Institute for Development Economic Research (UNU-WIDER).
    11. Block, Steven A. & Masters, William A. & Bhagowalia, Priya, 2010. "Child Undernutrition, Household Poverty and National Income in Developing Countries: Quantile Regression Results," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61323, Agricultural and Applied Economics Association.
    12. Jean-Pierre Lachaud, 2006. "La mesure de la croissance pro-pauvres en Afrique : espace de l’utilité ou des capacités ? Analyse comparative appliquée au Burkina Faso," Documents de travail 122, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    13. Desire Avom & Fabrizio Carmignani & Abdour Chowdhury, "undated". "Four Scenarios of Poverty Reduction and the Role of Economic Policy," MRG Discussion Paper Series 3109, School of Economics, University of Queensland, Australia.
    14. Sindzingre, Alice, 2005. "Explaining Threshold Effects of Globalization on Poverty: An Institutional Perspective," WIDER Working Paper Series 053, World Institute for Development Economic Research (UNU-WIDER).
    15. Lelli, Sara, 2004. "What Money Can't Buy: The Relevance of Income Redistribution for Functioning Levels," WIDER Working Paper Series 041, World Institute for Development Economic Research (UNU-WIDER).
    16. Buhong Zheng, 2011. "Consistent comparison of pro-poor growth," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(1), pages 61-79, June.
    17. Nissanke, Machiko & Thorbecke, Erik, 2005. "Channels and Policy Debate in the Globalization-Inequality-Poverty Nexus," WIDER Working Paper Series DP2005/08, World Institute for Development Economic Research (UNU-WIDER).
    18. Kenneth Harttgen & Stephan Klasen, 2011. "A Human Development Index at the Household Level," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 75, Courant Research Centre PEG.
    19. Desire Avom & Fabrizio Carmignani, "undated". "Is Mother Nature a Curse for Social Development?," MRG Discussion Paper Series 2709, School of Economics, University of Queensland, Australia.

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