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Economic Growth and Poverty Reduction: Measurement Issues using Income and Non-Income Indicators

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  • Stephan Klasen

    () (Universität Göttingen)

Abstract

This paper addresses two issues concerning the measurement of pro‐poor growth, a central concept for sustainable poverty reduction in developing countries. First, it attempts to clarify the debates about the definition and measurement of pro poor growth distinguishing between a weak and a strong absolute as well as a relative definition. The relevance of each definition depends on the purpose of the analysis as well as the assumptions regarding growthinequality trade‐offs. Given the focus of existing measures of pro‐poor growth on the income dimension, the second contribution is to present ways to apply the growth incidence curve and the Ravallion‐Chen framework of measuring pro‐poor growth to non‐income indicators. The analysis, which is applied to Bolivia for illustrative purposes, shows that the extension of the propoor growth toolbox to non‐income dimensions greatly improves our understanding of the trends in non‐income indicators along the entire distribution and thus greatly increases our ability to monitor progress towards the non‐income Millennium Development Goals (particularly goals 2‐6) and assess the linkages between income and non‐income poverty along the entire distribution. This can be of critical importance for poverty monitoring as well as policy interventions including the relative merits of growth versus direct intervention to improve the non‐income dimensions of poverty.

Suggested Citation

  • Stephan Klasen, 2006. "Economic Growth and Poverty Reduction: Measurement Issues using Income and Non-Income Indicators," Ibero America Institute for Econ. Research (IAI) Discussion Papers 142, Ibero-America Institute for Economic Research.
  • Handle: RePEc:got:iaidps:142
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    References listed on IDEAS

    as
    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    2. Martin Ravallion, 2005. "A poverty-inequality trade off?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(2), pages 169-181, August.
    3. Kakwani, N., 1993. "Performance in living standards : An international comparison," Journal of Development Economics, Elsevier, vol. 41(2), pages 307-336, August.
    4. Stephan Klasen, 2006. "Pro-Poor Growth and Gender Inequality," Ibero America Institute for Econ. Research (IAI) Discussion Papers 151, Ibero-America Institute for Economic Research.
    5. Gaurav Datt & Martin Ravallion, 2002. "Is India's Economic Growth Leaving the Poor Behind?," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 89-108, Summer.
    6. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
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    10. Klasen, Stephan, 2000. "Measuring Poverty and Deprivation in South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 33-58, March.
    11. Misselhorn, Mark & Klasen, Stephan, 2006. "Determinants of the Growth Semi-Elasticity of Poverty Reduction," Proceedings of the German Development Economics Conference, Berlin 2006 15, Verein für Socialpolitik, Research Committee Development Economics.
    12. Melanie Grosse & Kenneth Harttgen & Stephan Klasen, 2005. "Measuring Pro-Poor Growth with Non-Income Indicators," Ibero America Institute for Econ. Research (IAI) Discussion Papers 132, Ibero-America Institute for Economic Research.
    13. Mattias Lundberg & Lyn Squire, 2003. "The simultaneous evolution of growth and inequality," Economic Journal, Royal Economic Society, vol. 113(487), pages 326-344, April.
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    16. Melanie Grosse & Stephan Klasen & Julius Spatz, 2005. "Creating National Poverty Profiles and Growth Incidence Curves with Incomplete Income or Consumption Expenditure Data: An Application to Bolivia," Ibero America Institute for Econ. Research (IAI) Discussion Papers 129, Ibero-America Institute for Economic Research.
    17. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
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    More about this item

    Keywords

    Pro‐Poor Growth; Inequality; Non‐Income Poverty; Millennium Development Goals;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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