Promote Pro- poor Economic Growth

An on-going discussion that has drawn much attention since the adoption of the Millennium Development Goals (MDG) is the theme of poverty reduction. According to such a policy there is a growing need for developing countries to achieve a sustained rate of growth. However, since purely economic growth strategies may not necessarily elevate poverty and anti-poverty measures may not lead to an increase in growth, it has highlighted the need of an alternative approach that at the same time would benefit the poor and lead to an increase in economic growth. This has paved the way for the concept of ‘pro-poor’ growth, which interlinks growth, poverty and inequality. In terms of measuring it academics have characterised it by an absolute position or a relative position. There has been a growing consensus in favour of devising development policies, which promote ‘ pro poor’ economic growth. This paper will attempt to define the concept of ‘pro poor growth’, identify specific policies that promote pro poor growth and critically examine the arguments in favour of devising development policies, which promote ‘pro-poor’ economic growth.

Traditionally, it was widely accepted in the 1950s and 1960s that a ‘trickle down’ approach was the catalyst for development. It was maintained that initially the rich would see the gains from economic growth and then it would eventually filter down to the poor. Although, poverty may have been reduced indirectly, it must not be ruled out that a sustained increase in growth may not lead to a reduction in poverty (Kakwani & Pernia, What is Pro-poor Growth, 2000)

Defining Pro-Poor Economic Growth?

Generally, ‘Pro-Poor’ economic growth can be defined as growth, which, aids the poor and enhances their ca...

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... (Ravallion, Pro-Poor Growth: A Primer, 2004). This highlights that purely market economic growth may not necessarily benefit the whole population of the nation. Supporting this argument Giffins (1977) found that even if growth did benefit poor and poverty was reduced, not everyone in the poor sector reaped the gains (Fields, 1989). These arguments that growth did not necessarily lead to the alleviation of poverty were presumably based on the Kuznet Curve hypothesis. In short, the distribution of income gets worse and will not improve until a moderate level of income is reach. Subsequently, this could lead to years before poverty is reduced. However, some studies have found there to be no linear relationship between income inequality and economic growth (H & JR, 2004). Nevertheless, these points highlight the arguments in favour of devising development policies.