Direct And Indirect Effects Of Pro-Poor Growth

Balancing sustainable growth requires poverty to be reduced. The paper is aimed at determining under which conditions growth can be considered pro-poor. Own approaching to the definition of pro-poor growth is suggested. It allows identifying the growth factors, which directly reduce poverty. Furthermore, it analyses two transmission mechanisms through which growth can reduce poverty; a labor market and local redistribution. It reveals barriers in poverty reduction thus pointing at necessary state intervention. It also helps to evaluate if the sectors of strongest foreign direct investments contribute to poverty reduction. The hypotheses suggested in the paper are verified on a base of data from two sources: the Polish Household Budget Surveys and Local Data Bank offered by the Central Statistical Office of Poland for a period of 2005-2011. To identify the direct effects of growth on poverty reduction through labor market and local redistribution, we apply mediation models. Estimations of panel data models are used to assess dependence of poverty on economic growth and its factors, and relationships in the mediation models.