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Renewed Growth and Poverty Reduction in Zambia

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  • Bigsten, Arne

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Tengstam, Sven

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

The Zambian economy has grown relatively fast over the last decade up to the current global financial crisis. This paper discusses the challenge of using these growing resources effectively to improve the welfare of the population and to reduce poverty. The poverty head count index is found to have declined from 1998 to 2004 by about 5.4 percentage points. This change can be decomposed into a 6.6 percentage point reduction due to growth and a 1.2 percentage point increase due to inequality change. Since poverty is most severe in the rural areas it is important to make agriculture more efficient by improving roads and electricity, extension services and education. Our discussion further highlights the need to improve tax revenue collection and efficiency in realising budget expenditure plans. An important reform to undertake would be to change the budget cycle. The private sector development strategy should make the country a more attractive destination for private investors by creating a better business environment and infrastructure. The country also needs a new trading arrangement with the EU. Poverty relevant social services such as health and education remain vital. The health sector needs to be strengthened both because it has an immediate effect on welfare and because it helps build and protect human capital that is essential for long-term growth. Also social protection might have a role to play. It might be possible to use schools for channelling resources to the poor. Finally, improved governance helps all other measures to become more efficient.

Suggested Citation

  • Bigsten, Arne & Tengstam, Sven, 2009. "Renewed Growth and Poverty Reduction in Zambia," Working Papers in Economics 424, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0424
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    File URL: http://hdl.handle.net/2077/21652
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    References listed on IDEAS

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    1. Bigsten, Arne & Tengstam, Sven, 2008. "Smallholder Income Diversification in Zambia: The Way Out of Poverty?," Food Security Collaborative Working Papers 54490, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    2. Jayne, T. S., 2007. "Trends in agricultural and rural development indicators in Zambia," IWMI Working Papers H041609, International Water Management Institute.
    3. Jayne, T. S., 2007. "Trends in agricultural and rural development indicators in Zambia," IWMI Working Papers H041609, International Water Management Institute.
    4. Arne Bigsten & Abebe Shimeles, 2007. "Can Africa Reduce Poverty by Half by 2015?," Development Policy Review, Overseas Development Institute, vol. 25(2), pages 147-166, March.
    5. Ravallion, M. & Datt, G., 1991. "Growth and Redistribution Components of Changes in Poverty Measures," Papers 83, World Bank - Living Standards Measurement.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Zambia; poverty estimates; economic policy; budget; private sector; social services;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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