Growth is good for the poor

Date view Thread view Subject view Author view

From: Jim Whitehead (
Date: Sun Jun 11 2000 - 22:50:22 PDT

This should provide further fuel for the WTO debates...

Growth Is Good for the Poor
by David Dollar and Aart Kraay

Income of the poor rises one-for-one with overall growth. This general
relationship between income of the bottom fifth of the population and per
capita GDP holds in a sample of 80 countries covering four decades. Although
there is a fair amount of variation around this general relationship, a
number of popular views about the poverty-growth relationship are not true.
The effect of growth on income of the poor is no different in poor countries
than in rich ones. Incomes of the poor do not fall more than proportionately
during economic crises. The poverty-growth relationship has not changed in
recent years. We also show that policy-induced growth is as good for the
poor as it is for the overall economy. Openness to foreign trade benefits
the poor to the same extent that it benefits the whole economy. Good rule of
law and fiscal discipline are other factors that benefit the poor to the
same extent as the whole economy. Avoidance of high inflation in fact is
"super-pro-poor": that is, high inflation is more harmful to the income of
the poor than to GDP overall. In contrast we find no evidence that formal
democratic institutions or public spending on health and education have
systematic effects on incomes of the poor. These findings leave plenty of
room for further work, because they emphasize the fact that we know very
little about what systematically causes changes in the distribution of

Date view Thread view Subject view Author view

This archive was generated by hypermail 2b29 : Sun Jun 11 2000 - 22:57:06 PDT