When Do the Poor Benefit From Growth, and Why?

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 2001:12, Working Papers from Lund University, Department of Economics

Abstract: This paper summarizes and synthesizes some literature that picks up and extends the discussion of Dollar and Kraay (2000). While most of the theory has been known for a long time, the empirical material that has gradually become available in the past decade or so in the form of household budget surveys has made it possible to paint a more detailed and nuanced picture than the one usually available. Here, three major arguments are developed. First, the poverty reduction (PR) impact of a certain rate of growth depends crucially on the pattern of that growth, with rural growth usually being more efficient than urban growth, and agricultural growth more efficient than manufacturing growth. Second, poverty reduction in agriculture is much stronger in the medium run than in the short run. This is because the indirect PR effect – a multiplier effect – is typically much stronger than the direct one. Third, there is much that both governments and donors can do to improve the rate of PR, including appropriate targeting of public expenditure, increased provision of primary education to address growth-hampering income inequality, and better focus onb gender issues.

Keywords: poverty reduction; growth; agriculture (search for similar items in EconPapers)
JEL-codes: F35 O13 O19 Q12 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2001-08-22
New Economics Papers: this item is included in nep-dev and nep-ltv
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Citations: View citations in EconPapers (5)

Forthcoming in Tanzania Economic Trends.

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