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When Do the Poor Benefit From Growth, and Why?


  • Danielson, Anders

    () (Department of Economics, Lund University)


This paper summarizes and synthesizes some literature that picks up and extends the discussion of Dollar and Kraay (2000). While most of the theory has been known for a long time, the empirical material that has gradually become available in the past decade or so in the form of household budget surveys has made it possible to paint a more detailed and nuanced picture than the one usually available. Here, three major arguments are developed. First, the poverty reduction (PR) impact of a certain rate of growth depends crucially on the pattern of that growth, with rural growth usually being more efficient than urban growth, and agricultural growth more efficient than manufacturing growth. Second, poverty reduction in agriculture is much stronger in the medium run than in the short run. This is because the indirect PR effect – a multiplier effect – is typically much stronger than the direct one. Third, there is much that both governments and donors can do to improve the rate of PR, including appropriate targeting of public expenditure, increased provision of primary education to address growth-hampering income inequality, and better focus onb gender issues.

Suggested Citation

  • Danielson, Anders, 2001. "When Do the Poor Benefit From Growth, and Why?," Working Papers 2001:12, Lund University, Department of Economics.
  • Handle: RePEc:hhs:lunewp:2001_012

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    References listed on IDEAS

    1. Gray, Stephen F., 1996. "Modeling the conditional distribution of interest rates as a regime-switching process," Journal of Financial Economics, Elsevier, vol. 42(1), pages 27-62, September.
    2. Francis X. Diebold & Joon-Haeng Lee & Gretchen C. Weinbach, 1993. "Regime switching with time-varying transition probabilities," Working Papers 93-12, Federal Reserve Bank of Philadelphia.
    3. Tobias Rydén & Timo Teräsvirta & Stefan Åsbrink, 1998. "Stylized facts of daily return series and the hidden Markov model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(3), pages 217-244.
    4. Cheung, Yin-Wong & Erlandsson, Ulf G., 2005. "Exchange Rates and Markov Switching Dynamics," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 314-320, July.
    5. Hamilton, James D, 1989. "A New Approach to the Economic Analysis of Nonstationary Time Series and the Business Cycle," Econometrica, Econometric Society, vol. 57(2), pages 357-384, March.
    6. Abdul d Abiad, 2003. "Early Warning Systems; A Survey and a Regime-Switching Approach," IMF Working Papers 03/32, International Monetary Fund.
    7. Filardo, Andrew J. & Gordon, Stephen F., 1998. "Business cycle durations," Journal of Econometrics, Elsevier, vol. 85(1), pages 99-123, July.
    8. Kim, Chang-Jin, 1994. "Dynamic linear models with Markov-switching," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 1-22.
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    Cited by:

    1. Donaldson, John A., 2008. "Growth is Good for Whom, When, How? Economic Growth and Poverty Reduction in Exceptional Cases," World Development, Elsevier, vol. 36(11), pages 2127-2143, November.

    More about this item


    poverty reduction; growth; agriculture;

    JEL classification:

    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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