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Dynamic and Long-term Linkages among Growth, Inequality and Poverty in Developing Countries

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  • Katsushi S. Imai
  • Raghav Gaiha

Abstract

Drawing upon a cross-country panel data for developing countries, the present study sheds new empirical light on dynamic and long-term linkages among growth, inequality and poverty. First, agricultural sector growth is found to be consistently the most important factor in reducing inequality and poverty not only through its direct effects but also through its indirect effects. Second, there is a significant and negative association between inequality and GDP per capita, with macro institutional quality as one of the important factors in determining the inequality-growth relationship. Third, policies designed to prevent conflicts and mitigate their disruptive effects and violence, stabilise commodity prices, and enhance institutional quality would help eliminate worst forms of deprivation. Our analysis points to a drastic shift away from rural- urban migration and urbanisation as main drivers of growth and elimination of extreme poverty, and towards revival of agriculture in the post-2015 policy discourse. Indeed, the case for urbanisation rests on not just shaky empirical foundations but could mislead policy makers and donors.
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  • Katsushi S. Imai & Raghav Gaiha, 2014. "Dynamic and Long-term Linkages among Growth, Inequality and Poverty in Developing Countries," Economics Discussion Paper Series 1410, Economics, The University of Manchester.
  • Handle: RePEc:man:sespap:1410
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    Cited by:

    1. Jing You & Katsushi S. Imai & Raghav Gaiha, 2014. "Decoding the Growth-Nutrition Nexus in China: Inequality, Uncertainty and Food Insecurity," Economics Discussion Paper Series 1413, Economics, The University of Manchester.
    2. Katsushi S. Imai & Raghav Gaiha & Constanza Di NUCCI, 2014. "Agricultural Employment, Wages and Poverty in Developing Countries," Discussion Paper Series DP2014-32, Research Institute for Economics & Business Administration, Kobe University.
    3. Imai, Katsushi S. & Gaiha, Raghav & Garbero, Alessandra, 2017. "Poverty reduction during the rural–urban transformation: Rural development is still more important than urbanisation," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 963-982.
    4. Katsushi S. Imai & Gordon Abekah-Nkrumah & Purnima Purohit, 2014. "Is Rural Contribution to Aggregate Poverty Reduction Substantial? New Evidence," Global Development Institute Working Paper Series 20814, GDI, The University of Manchester.
    5. UNDP Regional Bureau for Africa & Ayodele Odusola, "undated". "Agriculture, Rural Poverty and Income Inequality in sub-Saharan Africa," UNDP Africa Policy Notes 2017-05, United Nations Development Programme, Regional Bureau for Africa.
    6. Katsushi S. Imai & Md. Faruq Hasan & Eleonora Porreca, 2015. "Do Agricultural Extension Programmes Reduce Poverty and Vulnerability? Farm Size, Agricultural Productivity and Poverty in Uganda," Discussion Paper Series DP2015-06, Research Institute for Economics & Business Administration, Kobe University.
    7. Katsushi S. Imai & Bilal Maleb, 2015. "Rural and Urban Poverty Estimates for Developing Countries: Methodologies," Discussion Paper Series DP2015-07, Research Institute for Economics & Business Administration, Kobe University.

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    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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