Pro-poor growth and pro-growth poverty reduction: meaning, evidence, and policy implications

The paper addresses two questions. First, what do national and cross-national regressions reveal about the link from economic growth to poverty reduction, and how is this link affected by (a) initial conditions, such as the degree of inequality, and (b) the type of growth, e.g its sectoral balance? Growth on average appear neither pro- nor anti-poor but there is considerable cross-country variation; we find some hints in a sample of 23 developing countries that: (a) growth may be anti-poor in countries that start with high inequality, (b) in such countries, agricultural growth may be especially anti-poor, a paradoxical finding that finds no support in country-level studies. Second, what do we know about the reverse links from asset and income distribution and redistribution to growth? The nature of inequality may matter, ascribed inequality being anti-growth and achieved inequality pro-growth. Reductions in inequality from high levels may be particularly pro-growth. High inequality is associated with a low elasticity of poverty to growth. We conclude that in poor countries, pro-poor growth is most likely to be stimulated by policies that encourage appropriate technical progress in agriculture, land redistribution, and increased incentives for fertility reduction.