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Towards A Virtuous Spiral Between Poverty Reduction And Growth: Comparing Sub Saharan Africa With The Developing World

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  • Thorbecke, Erik
  • Ouyang, Yusi

Abstract

The positive impact of growth on poverty reduction has been well documented and confirmed. In contrast, the impact of poverty reduction on subsequent growth has not been systematically investigated. The main objective of this paper is to explore empirically the reverse causality between poverty and growth. Using data from 129 developing countries (44 in SSA) during 1981–2018, this study finds that faster poverty reduction is linked to faster growth in the developing world and especially the SSA region; while faster growth contributes to faster poverty reduction more in the developing world outside of SSA than within SSA. These findings suggest that for faster poverty reduction in the entire developing world but especially in SSA, we needa pro-growth poverty reduction strategy, where interventions directly target poverty reduction, and through that also contribute to faster growth; as a complement to the more conventionalpro-poor growth strategy, where interventions directly target growth and only reduce poverty through growth. The main conclusion is that the combined effects of growth on poverty and of the latter on subsequent growth can lead to a virtuous spiral.

Suggested Citation

  • Thorbecke, Erik & Ouyang, Yusi, 2022. "Towards A Virtuous Spiral Between Poverty Reduction And Growth: Comparing Sub Saharan Africa With The Developing World," World Development, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:wdevel:v:152:y:2022:i:c:s0305750x21003910
    DOI: 10.1016/j.worlddev.2021.105776
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