Poverty Reduction through Growth and Redistribution Policies—a Panel Analysis for 59 Developing Countries

In this paper, we empirically test the determinants of growth, as derived from a semi-endogenous growth model, in terms of its poverty-reducing effects. We base our empirical analysis of the growth and distribution effect of economic policies on a panel data set of 59 developing countries, divided into two subgroups, and a sample period ranging from 1960 to 2004. For purposes of estimation we make use of the generalized methods of moments (GMM) system estimator. The estimations reveal a poverty-reducing effect of investment. In contrast population growth induces higher poverty. The import of knowledge is growth enhancing only for countries at a higher stage of development—meanwhile the positive growth effect of an increasing democratization is limited to the poor developing countries.