Severe poverty and growth: a macro-micro analysis, CPRC Working Paper No. 51
Abstract
The first section of this paper reviews the relationship of growth performance, by country and region, to various definitions of poverty and in particular to severe poverty. Results for the period since 1990 indicate:
- a perverse (i.e. positive) relationship between growth and headcount poverty in some regions, notably Russia, much of eastern Europe and much of sub-Saharan Africa.
- a tendency for the poverty elasticity to be very variable between different definitions of poverty, and, somewhat counter-intuitively, to be higher (i.e. more responsive) in relation to measures of severe poverty than in relation to standard measures of poverty.
- a tendency for the responsiveness of several of these 'poverties' to growth to vary according to specific structural characteristics that can be influenced by policy.
The second section examines the same question of the varying growth-elasticity of poverty through a micro, case-study lens. Initially it looks at the outliers - those country cases where growth was, and was not, associated with an improvement in the welfare of the poorest. Then it focuses more sharply on specific countries: at this stage, Uganda, where the macro-poverty elasticity was 'orthodox' , and Bolivia, where it was perverse.
In summary, in many regions and countries, 'growth is not nearly enough' to reduce severe poverty, and this fact has political significance, but we know something about the policy and institutional factors which may enable exit from such poverty. These include appropriate risk-reduction institutions, labour market deepening, agricultural intensification (particularly in Africa), the availability of support networks, and a pro-poor pattern of public expenditure.
Citation
Severe poverty and growth:a macro-micro analysis, CPRC Working Paper No. 51, Chronic Poverty Research Centre (CPRC), Manchester, UK, ISBN 1-904049-50-8, 39 pp.
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