Growth without Poverty Reduction? Examining Micro-Macro Links in Tanzania

Anders Danielson
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Anders Danielson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

No 2004:22, Working Papers from Lund University, Department of Economics

Abstract: Studying the relation between economic growth and income poverty reduction without taking changes in the distribution of income into consideration is like setting up Othello without Iago in the play. Without any further references to Shakespeare, this paper examines the relations between poverty levels, economic growth and changes in inequality in Tanzania during the 1990s. It offers four conclusions. First, the efficiency with which growth reduces poverty increases with a country’s income level, so low-income countries should combine growth promotion with redistribution; second, growth in Tanzania during the 1990s, has accelerated, but has also been concentrated in sectors to which the majority of the poor have few links; third, the efficiency with which income growth reduces poverty in Tanzania appears very sensitive to the pattern of growth; fourth, recent poverty reduction strategies do not appear to recognize this fact and rely apparently instead on a strategy in which growth increases tax revenue that can be used to alleviate poverty through an expansion of publicly supplied (social) services. The selected strategy appears particularly ill-chosen, both because of Tanzania’s historical tax collection record and because of the emerging consensus on the state as a facilitator, not a producer, in the development process.

Keywords: poverty; inequality; growth; Tanzania (search for similar items in EconPapers)
JEL-codes: I32 O15 O55 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-10-23
New Economics Papers: this item is included in nep-dev
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