This paper examines the relationship of the poorest with growth (absolute sense), and whether or not the relationship the very poorest people have with growth is different from that for the poor as a whole (relative). Impacts of economic growth on the poorest are routed through direct channels (raising their production or income levels) and indirect channels (due to increased public spending or remittances). However, benefits are not guaranteed to all people, and in some cases the impact of growth on the poorest may be adverse. The paper begins the process of assembling data on this relationship and unpacking some explanation for patterns.
The findings of a series of 14 case studies commissioned by AFD, BMZ, DFID and the World Bank as part of the 'Operationalising Pro-Poor Growth' (OPPG) Project, are interrogated with a specific focus on the poorest people. These countries fall into two broad categories: those where poverty was significantly reduced over the 1990s, along with high rates of growth and significant increased inequality (El Salvador, Ghana, Senegal, Uganda, Vietnam, India, Brazil, Bangladesh); and those that experienced moderate rates of poverty reduction and growth, and where inequality declined (Burkina Faso, Bolivia, Indonesia, Romania, Zambia).
The paper examines the growth incidence curves (GICs) for specific information on what happens to the poorest in comparison to the poor and national average growth rates. The GICs clearly show that using aggregate measures of growth, poverty and inequality hides much of the variation across different populations.
Background Paper for the Chronic Poverty Report 2008-09. Chronic Poverty Research Centre, London, UK, 72 pp.