The Dynamics of Income Growth and Poverty: Evidence from Districts in India

This article examines the dynamics of the income‐distribution pattern in India during the post‐1991 economic reforms. It considers district‐level per‐capita income data across agriculture, manufacturing, services, and various constituent sub‐sectors, and finds evidence in favour of a uniform process of growth across sectors and regions, which has helped to reduce poverty. In particular, the article finds that growth in agricultural income and access to finance are important for this.     

Uganda: No More Pro‐poor Growth?

This article explores changing growth regimes in Uganda, from pro‐poor growth in the 1990s to growth without poverty reduction, actually even with a slight increase in poverty, after 2000. Not surprisingly, it finds that good agricultural performance is the key determinant of direct pro‐poor growth in the 1990s, while lower agricultural growth is the root cause of the recent increase in poverty. At the same time, after 2000 low agricultural growth appears to have induced important employment shifts out of agriculture, which have dampened the increase in poverty. The article also assesses the indirect form of pro‐poor growth by analysing the incidence of public spending and the tax system, and finds that indirect pro‐poor growth has been achieved to only a limited extent.     

Pathways to poverty reduction

Of the myriad approaches to reducing poverty, which have proved effective on a national scale? This article analyses 15 systematically selected national cases of demonstrated rapid poverty reduction, seeking insights into effective approaches to reducing poverty. From these 15 economies, in which the bottom quintile experienced an annual increase in income of at least 6% over at least a decade, emerge four poverty‐reduction pathways: (1) industrialisation, (2) rural development, (3) social welfare and (4) petroleum‐generated employment. In addition to helping us understand what policy approaches have actually helped reduce poverty, this article has implications for the understanding of economic growth, the impact of pro‐growth policies, the relationship between state and market, and the roles of non‐government organisations (NGOs) and civil society.     

Questioning the Pro‐Poor Agenda: Examining the Links between Social Protection and Poverty

This article investigates an empirical puzzle. Taking the case of Botswana, how is it that poverty is so high, when the country largely conforms to pro‐poor growth strategies? This article suggests that the minimal role of social‐security policies partly explains the relatively high poverty levels. This hypothesis is tested in a large‐N study of developing countries which shows that broad‐based and generous, rather than pro‐poor, social‐security policies impact strongly on poverty levels. The analysis further alludes to other obstacles to poverty reduction, such as economic transformation, which may be combined with a pro‐active social‐policy agenda. Thus, poverty‐alleviating strategies should be refocused to allow for a wider and more coherent role for social‐security policies.     

A vulnerability approach to the definition of the middle class

Measurement of the middle class has recently come to the center of policy debate in middle-income countries as they search for the potential engines of growth and good governance. This debate assumes, first, that there is a meaningful definition of class, and second, that the thresholds which define relatively homogeneous groups in terms of pre-determined sociological characteristics can be found empirically. This paper aims at proposing a view of the middle class based on vulnerability to poverty. Following this approach the paper exploits panel data to determine the amount of comparable income -associated with a low probability of falling into poverty— which could define the lower bound of the middle class. It looks at absolute thresholds, challenging the view that people just above the poverty line are actually part of the middle class. In an analogy with poverty measurement, there is a degree of arbitrariness in the definition of specific thresholds, but the concept behind them is clear and economically meaningful. The estimated lower-threshold is used in cross-section surveys to quantify the size and the evolution of middle classes in Chile, Mexico, and Peru over the past two decades. The evidence also shows that the middle class has increased significantly in all three countries. There is an important group of people, however, who cannot be defined as middle class from this perspective, but remain vulnerable to fall back into poverty.     

Are the Effects of the Macroeconomy and Social Policies on Poverty Different in Nonmetro Areas in the United States?*

Abstract The macroeconomy and social policies can have substantial influences on poverty in the United States. In this paper, I investigate whether these influences differ across metro and nonmetro areas. To do so, using a 16‐year panel of state‐level data, I estimate state and year fixed effects models separately for metro and nonmetro areas to see if the effects of the macroeconomy and social policies differ between these two areas. These models are estimated using two measures—the poverty rate and the squared poverty gap—and by family type. I find that cyclical forces have a much stronger effect on the poverty rate in nonmetro areas in comparison to metro areas, but the effects are similar for the squared poverty gap; wage growth has a pronounced effect on poverty in metro areas but no effect in nonmetro areas; and state‐level social policies have slightly larger effects in nonmetro areas, but the effects are small.     

Household Enterprises and Poverty Reduction in Sub‐Saharan Africa

Employment in Household Enterprises (HEs) has been an integral part of the recent economic growth in sub‐Saharan Africa (SSA). Yet employment and development strategies tend to exclude the sector, despite the fact that households with HEs tend to be richer. A good example is Mozambique, where 34% of households rely on income from this source. Analysis of household livelihoods using panel data shows that starting HEs is associated with upward wealth mobility and poverty reduction, particularly for rural and poorly‐educated households. Targeted programmes directed towards the constraints to HE creation, survival and income growth would be likely to enhance the effectiveness of employment and poverty reduction strategies in Mozambique as well as in other low income countries in SSA.     

Employment and labour productivity in high unemployment countries

Contemporary development strategies emphasize labour productivity growth because it has historically underpinned rising living standards. Today, however, poverty reduction and inclusive development in those developing countries with high unemployment require increasing the employment rate even if this means lower average labour productivity. We critique the International Labour Organization (ILO) for its overly universalizing advocacy of high‐productivity growth strategies and for failing to confront the trade‐off between more and better‐quality jobs. This is particularly problematic in high unemployment contexts in Southern Africa, where labour productivity growth between 2000 and 2013 came at the cost of a falling employment rate.     

Why Agriculture Remains a Viable Means of Poverty Reduction in Sub‐Saharan Africa: The Case of Ethiopia

Although there is much empirical evidence of the importance of agricultureled economic growth, there is a renewed emphasis in development circles on the industrial sector as the main driver of growth, even for the low‐income countries of sub‐Saharan Africa. This article applies a simplified model of agricultural growth linkages to illustrate the importance of agricultural growth for increasing employment and accelerating poverty reduction in Ethiopia. Achieving rapid agricultural growth, however, will require the engagement of small commercial farmers, large enough to adopt new technologies and produce significant marketed surpluses, but small and numerous enough to have spending patterns that drive a large, vibrant rural non‐farm sector.     

Finance-growth-poverty nexus in South Africa: A dynamic causality linkage

This paper attempts to examine the dynamic causal relationship between financial development, economic growth and poverty reduction in South Africa—using a trivariate causality model. The study attempts to answer one critical question. Which sector leads in the process of poverty reduction in South Africa—the financial sector or real sector? Using cointegration and error-correction models, the empirical results of the study show that both financial development and economic growth Granger—cause poverty reduction in South Africa. The study also finds that economic growth Granger-causes financial development and, therefore, leads in the process of poverty reduction in South Africa. This applies irrespective of whether the causality test is conducted in the short-run or in the long-run. The study, therefore, recommends that policies geared towards increasing economic growth should be intensified in South Africa in order to make the economy more monetised, and to reduce the high level of poverty currently prevailing in the country.     

Growth and Poverty Reduction in Uganda, 1999–2000: Panel Data Evidence

To explore factors underlying growth and poverty reduction in Africa while overcoming some of the limitations of cross‐country analysis, this article uses micro‐level survey and panel‐data evidence from Uganda spanning 1992–2000. The high elasticity of both income growth and poverty reduction with respect to agricultural output (coffee) prices confirms the benefits from Uganda's decisive liberalisation of output markets. It also suggests the importance of product diversification to protect the poor against price shocks and the potential of cotton‐market improvements in tackling persistent poverty in the North. The importance of improving access to basic education and health care emerges more clearly than in cross‐country analysis, but benefits depend on complementary investments in electricity and other infrastructure, and reductions in civil strife.     

Connected for Development? Theory and evidence about the impact of Internet technologies on poverty alleviation

Based on the assumption that increased access to internet services boosts economic growth and improves the well‐being of the poor, governments in both developed and emerging regions are heavily investing in internet connectivity projects. This article reviews the existing evidence as to the impact of internet technologies on various development dimensions, and articulates the empirical evidence into an analytical framework that seeks to identify the micro‐linkages between internet adoption and poverty alleviation. The review suggests that the development pay‐offs of internet technologies are ambiguous due to two interrelated effects. First, because effective appropriation requires a range of skills as well as complementary investment in human capital and organizational changes. This tends to favour well‐educated workers and firms with more innovative capacity and access to finance. Second, because the positive effects of internet dissemination on market co‐ordination and political institutions grow exponentially with adoption levels. As a result, while the evidence indicates that advanced economies are reaping significant benefits from internet investments, the returns for less advanced economies, and in particular for the fight against poverty in these regions, remain uncertain.     

Economic Growth,Health and Poverty: An Exploratory Study for India

This article analyses the possible links between economic growth, poverty and health, using panel data for the Indian states. The findings indicate that, though growth tends to reduce poverty, significant improvements in health status are also necessary for poverty to decrease. Also, economic growth and health status are positively correlated and have a two‐way relationship, suggesting that better health enhances growth by improving productivity, and higher growth allows better human capital formation. Health expenditure is an important determinant of both higher growth and better health status, and is therefore a key tool available to policy‐makers. Among other exogenous variables, literacy and industrialisation seem to improve both health outcomes and growth, and to reduce poverty.     

Private‐Sector Investment in Infrastructure: Rationale and Causality for Pro‐poor Impacts

This article reviews the arguments for promoting private investment in infrastructure as a basis for poverty reduction in developing countries. It describes the experience leading to the development of international ‘facilities’ intended to address impediments to private investment. It then explores three ‘levels’ of literature: that of the facilities themselves, of donor organisations, and of academic authors. At each, it investigates the rationale and causal pathways leading from support for private investment to pro‐poor outcomes. It finds there is a possible but not necessary association between private investment, economic growth and poverty reduction, but the causal chain is poorly understood. It proposes the development of such a causal framework.     

Poverty Catchments: Migration,Residential Mobility,and Population Turnover in Impoverished Rural Illinois Communities

Abstract Research has thoroughly documented how out‐migration of the educated and skilled from rural areas leaves behind a poorer population and creates pockets of rural poverty. Recently, studies have recognized that the poor are also geographically mobile and that poverty migration patterns can reinforce rural poverty concentrations. In this process, certain impoverished rural communities in economically depressed regions receive a disproportionate share of poverty migrants, concentrating poverty in certain locations. This paper examines the conditions and processes through which poor rural communities become likely destinations for a highly mobile segment of the rural poor and near‐poor. Utilizing case studies of depressed rural Illinois communities, it investigates how the interplay of community factors and the behavior of migrants transforms rural communities from residentially stable to highly mobile, impoverished places.     

Understanding the Socioeconomic Status of International Immigrants in Chile Through Hierarchical Cluster Analysis: a Population‐Based Study

Immigration to Chile is not large (just under 2% of the total population) but has increased in recent years. This study aimed to analyse the socioeconomic status (SES) of immigrants in Chile and compare it with the Chilean‐born, by secondary data analysis of an anonymous nationally representative survey (CASEN, 2006). Immigrants are categorized into Low, Medium and High SES through hierarchical cluster analysis. Around 1 per cent of the total sample are international immigrants; an additional 0.7 per cent did not report their migration status. Self‐reported immigrants show great variability in their SES. Immigrants in the Low SES cluster appeared to be significantly younger than those in Medium and High SES, also more likely to be children, women and belong to an ethnic minority. Immigrants in the Low SES cluster appeared similar to the unemployed, poorest Chilean‐born but are more than eight years younger on average and more likely to be female. Immigrants to Chile are a unique group, with socio‐demographic characteristics that differ significantly from the Chilean‐born population, but there is great heterogeneity and complexity within this group. Cluster analysis provided a meaningful interpretation of the multidimensional concept of SES and allowed the identification of a vulnerable group of Low SES immigrants to Chile.     

How Countries Become Rich and Reduce Poverty: A Review of Heterodox Explanations of Economic Development

For the sake of less developed countries, it is time to adjust the discussion of international development assistance on poverty reduction. This article attempts to do so by reviewing new and old literature explaining why some countries are rich and others are poor. History has repeatedly shown that building up capabilities in manufacturing and improving the productivity of agriculture are the keys to wealth creation and long‐term sustained poverty reduction. Furthermore, industrialisation and increased agricultural productivity are interdependent processes. Discussion about ending world poverty needs to be shifted back to consideration of economic transformation and the role foreign aid can reasonably play in achieving these objectives.     

Working Poverty across the Metro‐Nonmetro Divide: A Quarter Century in Perspective, 1979–2003

Researchers are increasingly recognizing space as a key axis of inequality. Scholars concerned with spatial inequality have called for special attention to issues of comparative advantage and disadvantage across space as well as the consideration of the subnational scale. This study draws on these ideas by examining the relationship between work and poverty in the United States with an explicit comparative focus on metropolitan (metro) and nonmetropolitan (nonmetro) areas. Moreover, this study joins space with its counterpart time by exploring how this relationship has changed over the last quarter century. Using data from the March Current Population Survey, the results show that working poverty persistently had a disproportionate impact on nonmetro families between 1979 and 2003. However, the results also show a trend of residential convergence, as working poverty in metro areas has climbed toward the levels experienced in nonmetro areas. Logistic‐regression models exploring the effects of residence, family labor supply, and period confirm that labor supply has consistently provided nonmetro families with less protection from poverty than their metro counterparts, but also show that this disadvantage has waned in recent years. The findings underscore the need for policies that support those working on the economic margins and recognize the variable opportunity costs of employment across the rural‐urban continuum.     

BRAC: Anatomy of a “poverty enterprise”

Management of the poverty alleviation process has created a new form of poverty enterprise. This enterprise provides poverty‐production‐market linkages, and in the process, it combines three features: a nonprofit nongovernmental organization, a for‐profit nongovernmental organization that has established an internal market, and a profit‐making industrial and business concern. This article explains how BRAC (Building Resources Across Community) in Bangladesh has used poverty to transform itself from a tiny relief distribution organization into the world's largest poverty enterprise. This enterprise is characterized by contradictions between its public claims and actual practices.     

The microfinance promise—can it be kept? A macro perspective

After five decades of rapid expansion of microfinance worldwide, little is known about its aggregate effects and whether the “microfinance promise” of poverty reduction holds at the macro level. Challenging questions have arisen. Here we explore the dynamic response of microfinance on economic growth, financial deepening and income inequality. Countries are grouped into three broad clusters (stable, moderate and poor) based on macro‐institutional variables. Our results show that microfinance has a significant long‐term ability to affect the broader economy. However, the impact and dynamics of microfinance differ substantially across macro‐institutional environments. It grows in weaker environments, reaches its peak in developing economies, and then gradually “dies out” in more stable economies. While there is evidence of a positive impact of microfinance at the aggregate level, the response is different depending on whether countries are poor, moderately developed or economically stable. Once countries climb up the macro‐institutional “ladder,” microfinance can take a different shape and its relationship with other macroeconomic fundamentals can change. Our results indicate that microfinance has the strongest effect when the external environment is supportive and proactive; in weak environments, microfinance cannot grow sufficiently. Therefore, more attention should be given to supporting the socioeconomic dimensions of economies.