Pro-poor growth

Pro-poor growth and inequality

The causal relationships between growth, poverty and inequality are complex and there is evidence to indicate that inequality can both hinder and promote growth, and that growth can both reduce and deepen inequality. The following papers explore these relationships. Different conclusions are drawn and the specific contexts from which evidence is collected results in differing outcomes.

The documents below explore the ‘Poverty-Growth-Inequality’ Triangle. This describes the linkages among the three factors, focusing on whether growth reduces or increases inequality and the corresponding impact of growth on poverty.

Bourguignon, F., 2004, ‘The Poverty-Growth-Inequality Triangle’, Paper prepared for presentation at the Indian Council for Research on International Economic Relations, New Dehli, February 2004
Should development strategies focus on growth, or poverty, or inequality? How does income distribution affect poverty reduction? How does growth impact on income distribution? This paper by the World Bank analyses the relationships between poverty, growth and inequality. The paper argues that both growth and changes in inequality play a major role in poverty reduction.
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Ravallion, M., 2004, ‘Pro-Poor Growth: A Primer’, working paper 3242, The World Bank, Washington
What factors contribute to pro-poor growth? Is pro-poor growth an impediment to future economic growth, or do pro-poor policies contribute to growth? This paper, published by the World Bank, contends that well-designed poverty-reduction strategies can help promote growth, and hence, longer-term poverty reduction. The challenge for policy-makers is to combine growth-promoting reforms with the right policies to ensure that poor people can participate fully.
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Fuentes, R., 2005, ‘Poverty, Pro-Poor Growth and Simulated Inequality Reduction’. Human Development Report Office, Occasional Paper. UNDP, New York
What is the relative importance of growth promotion versus inequality reduction in terms of lowering poverty levels? What kinds of economic growth are most effective at reducing poverty? This paper from the United Nations Development Programme analyses economic models and real-world data to compare the effectiveness of growth-based and redistributive policies in combating poverty. It argues that “pro-poor growth policies”, targeted at promoting growth in the agricultural sector and increasing education levels among the poor, could halve global poverty far quicker than growth without redistribution.
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Wade, R. and Wolf, P., 2003, ‘Are Global Poverty and Inequality getting Worse?’, in The Global Transformations Reader, ed. D. Held and A. McGrew, Cambridge Polity Press, Cambridge, pp. 440-447
Are levels of global poverty and inequality getting worse? What are the means for reducing poverty and inequality at a worldwide level? This chapter from a book, published by Polity, contains an exchange of views between two leading experts, Martin Wolf and Robert Wade. Wolf claims that there has been a decline in world-wide levels in absolute poverty and household inequality and moreover, that globalisation and economic integration provide the best means for reducing poverty and inequality. In contrast, Wade argues that household inequality is probably rising and that increased economic integration--in the sense of free trade and investment - is in most cases neither a necessary nor sufficient condition for development and may actually be harmful for some developing countries at some points in time.

These resources consider gender, inequality and growth:

Barro, R.J., 1999, ‘Inequality and Growth in a Panel of Countries’.  Journal of Economic Growth 5(1), pp. 5-32
What is the effect of inequality on growth? This paper from Harvard University discusses recent theoretical analyses of the macroeconomic consequences of income inequality and applies a framework developed previously for the determinants of economic growth. It concludes that while there is little overall relation between income inequality and rates of growth and investment, higher inequality tends to retard growth in poor countries and encourage growth in richer places.
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Dollar, D. and Gatti, R., 1999 ‘Gender Inequality, Income and Growth: are Good Times Good for Women?’ Working Paper Series No. 1, The World Bank, Washington
Why do women have lower socio-economic status in developing countries compared to developed countries? Does higher income reduce gender inequality? Does gender inequality affect growth? This paper published by the World Bank investigates the relationship between gender inequality, income and growth, with a particular focus on gender inequality in education. The paper concludes that under-investment in women does lead to slower growth.
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Kabeer, N., 2003, ‘Institutionalising Gender Equity Goals in the Policy Process’ in Gender Mainstreaming in Poverty Eradication and the MDGs A Handbook for Policy-Makers and Other Stakeholders, ed., N Kabeer, Commonwealth Secretariat/IDRC/CIDA, London, pp.197-232
Is there a trade off between gender equality and pro poor growth? How gender sensitive have Poverty Reduction Strategy Papers (PRSPs) been and how effective are gender-responsive budget (GRB) analyses? Naila Kabeer, for the Commonwealth Secretariat, examines evidence and case studies from a range of developing countries to assess these issues. Women’s agency and the promotion of gender equality can and should play a central role in achieving the Millennium Development Goals (MDGs).

The following paper discusses the relationship between poverty and inequality:

World Bank, 2006, ‘Equity and Development’, World Development Report 2006, Oxford University Press, New York
Is there a relationship between equity and development? This report, published by the World Bank, recognises both the intrinsic value of equity and its instrumental role in reducing poverty. Greater equity contributes to poverty reduction through potential beneficial effects on aggregate long-term development and through enhanced opportunities for poorer groups within society. Government institutions should ensure equal opportunities for all individuals by promoting a level playing field both politically and economically in the domestic and global arena.
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