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Draft Comments Welcome Is inequality irrelevant for growth and poverty reduction? *

By S. Bhalla


This paper examines at both a theoretical and empirical level the relationship between poverty, inequality and growth. Little (theoretical or empirical) support is found for the contention that initial inequality affects the pace of poverty reduction. Empirically, little support is found for the hypothesis that more equal economies grow faster, ceteris paribus. On an average basis, the contribution of inequality change to observed poverty reduction is less than 10 percent. This estimate is in striking contrast to the belief that the share maybe as high as 50 percent. Finally, the paper examines up to nine measures of “pro-poor ” growth – it is shown that simply looking at per capita income growth yields an ordering that is almost identical to that yielded by specialized pro-poor growth indices. For most of its formative period, the field of development economics was concerned with one overriding, and one related, objective. The former was growth, the latter poverty reduction. Since about the mid-nineties, the focus has shifted to the second, derive

Year: 2004
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