Interrelationship between Growth, Inequality, and Poverty: The Asian Experience

Hyun Son ()
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Hyun Son: Asian Development Bank

No 96, ADB Economics Working Paper Series from Asian Development Bank

Abstract: The paper first investigates how much growth is required to offset the adverse effect of an increase in inequality on poverty. This trade-off between inequality and growth is quantified using a tool called the "inequality-growth trade-off index." The trade-off index measures how much growth in mean income or expenditure will be required to offset a 1% increase in inequality, with poverty remaining unchanged. Second, the paper looks into the issue of pro-poor growth. How to generate pro-poor growth is a critical challenge for policymakers concerned with sustainable poverty reduction in developing countries. Pro-poor growth is defined as growth that benefits the poor proportionally more than the nonpoor. By using a measure called the "poverty equivalent growth rate," the paper examines both (i) how growth in mean income (or expenditure) has fared in Asia; and (ii) how the benefits of growth are distributed between the poor and the nonpoor.

Keywords: growth; inequality; poverty; pro-poor growth; trade-off (search for similar items in EconPapers)
JEL-codes: D31 I32 O15 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007-06-01
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0096

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