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Renewed Growth and Poverty Reduction in Zambia

  • 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)

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.

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File URL: http://hdl.handle.net/2077/21652
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 424.

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Length: 38 pages
Date of creation: 21 Dec 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0424
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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  1. 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, 03.
  2. Jayne, Thomas S. & Govereh, Jones & Chilonda, Pius & Mason, Nicole M. & Chapoto, Antony & Haantuba, Hyde H., 2007. "Trends in Agricultural and Rural Development Indicators in Zambia," Food Security Collaborative Working Papers 54483, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  3. 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.
  4. Ravallion, M. & Datt, G., 1991. "Growth and Redistribution Components of Changes in Poverty Measures," Papers 83, World Bank - Living Standards Measurement.
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