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Focusing on pro-poor growth and income poverty, Promoting Pro-Poor Growth: Policy Guidance for Donors identifies binding constraints and offers policies and strategies to address them.
This policy statement looks at how policies for pro-poor growth and other policy areas need to interact to make sustainable inroads into poverty reduction. There are three key messages: rapid and sustained poverty reduction require a pace and pattern of growth that enhances the ability of poor women and men to contribute to and benefit from growth; policies to tackle the multiple dimensions of poverty, including issues of gender and environment are mutually reinforcing and should go hand-in hand; empowering the poor is essential for bringing about the policies and investments needed for pro-poor growth.
Growth is pro-poor if the poverty measure of interest falls. This implies three potential sources of pro-poor growth: (a) a high rate of growth of average incomes; (b) a high sensitivity of poverty to growth in average incomes; and (c) a poverty-reducing pattern of growth in relative incomes. I empirically decompose changes in poverty in a large sample of developing countries into these components. In the medium run, most of the variation in changes in poverty is due to growth, suggesting that policies and institutions that promote broad-based growth should be central to pro-poor growth. Most of the remainder is due to poverty-reducing patterns of growth in relative incomes, rather than differences in the sensitivity of poverty to growth in average incomes. Cross-country evidence provides little guidance on policies and institutions that promote these other sources of pro-poor growth.
Economic growth is the most important determinant of poverty reduction. But countries with similar rates of growth can experience different poverty reduction rates.
Developing countries want to join in the globalisation process. However, the increasing complexity of global markets, the new challenges of the multilateral trading system and the competing demands of regional, bilateral and multilateral trade agreemen
Focusing on pro-poor growth and income poverty, Promoting Pro-Poor Growth: Policy Guidance for Donors identifies binding constraints and offers policies and strategies to address them.
Empowerment of those living in poverty is both a critical driver and an important measure of poverty reduction. This report aims to build donor understanding of empowerment and how best to support it.
Is there a tradeoff between raising growth and reducing inequality and poverty? This paper reviews the theoretical and empirical literature on the complex links between growth, inequality, and poverty, with causation going in both directions. The evidence suggests that growth can be effective in reducing poverty, but its impact on inequality is ambiguous and depends on the underlying sources of growth. The impact of poverty and inequality on growth is likewise ambiguous, as several channels mediate the relationship. But most plausible mechanisms suggest that poverty and inequality reduce growth, at least in the long run. Policies play a role in shaping these relationships and those designed to improve equality of opportunity can simultaneously improve inclusiveness and growth.