The relationship between poverty, income inequality and inclusive growth in Sub-Saharan Africa

Mary Amponsah, Frank Agbola and Amir Mahmood

Economic Modelling, 2023, vol. 126, issue C

Abstract: The Global Financial Crisis and the recent COVID-19 pandemic have devastated Sub-Saharan Africa (SSA), leading to increased poverty and income inequality. Consequently, there has been renewed interest in the relationship between poverty, inequality and economic growth. In this paper, we empirically tested the Poverty-Growth-Inequality triangle (PGIT) hypotheses using comprehensive panel data from 35 SSA countries between 1990 and 2018. Our models were estimated using the Two-Step Instrumental Variables Generalised Method of Moments (2SIV-GMM) estimator. Our findings suggest that income inequality adversely impacts poverty and worsens inclusive growth. We also found that inclusive growth can help reduce poverty, but its impact on income inequality depends on the type of inclusiveness. Inclusive growth moderates the adverse effect of income inequality on poverty. From a policy perspective, our results highlight the importance of promoting inclusive growth, demonstrating that it is critical for mitigating the adverse effect of poverty and income inequality on livelihoods in Sub-Saharan Africa.

Keywords: Inclusive growth; Poverty; Income inequality; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: D63 F43 O11 O47 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:126:y:2023:i:c:s0264999323002274

DOI: 10.1016/j.econmod.2023.106415

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