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Progress on Poverty in Africa: The Importance of Growth and Inequality

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  • Augustin Kwasi Fosu

Abstract

Employing World Bank data, this paper, first, historically examines Africa's record on poverty incidence, spread and severity, as compared with other regions of the world, at the US$1.90 and US$3.20 per day (2011 PPP) poverty standards. Second, it evaluates country-specific progress on growth, poverty and inequality, and compares the ‘poverty transformation efficiency vector’ (PTEV) among African countries. Third, the study analyses the relative roles of income growth and inequality changes in explaining African countries' poverty records, through a decomposition of poverty changes using ‘optimal’ income and inequality elasticity estimates from the ‘identity’ model. The study finds that following the dismal record on poverty during the 1980s, progress on poverty has been appreciable since Africa's growth resurgence starting in the mid-1990s, and that this progress was driven mainly by income growth, consistent with the global evidence. Nonetheless, inequality often played a complementary role in most of the countries and, in a small number of cases, it was the primary driver of changes in poverty. Thus, the present study sheds light on country-specific differences in the relative roles of growth and inequality in poverty reduction on the continent, based on both qualitative and quantitative evidence. The study should, therefore, provide a useful compass to those who seek to understand country-specific situations within the African context.

Suggested Citation

  • Augustin Kwasi Fosu, 2023. "Progress on Poverty in Africa: The Importance of Growth and Inequality," Journal of African Economies, Centre for the Study of African Economies, vol. 32(Supplemen), pages 164-182.
  • Handle: RePEc:oup:jafrec:v:32:y:2023:i:supplement_2:p:ii164-ii182.
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    1. Augustin Kwasi Fosu, 2018. "The Recent Growth Resurgence in Africa and Poverty Reduction: The Context and Evidence," Journal of African Economies, Centre for the Study of African Economies, vol. 27(1), pages 92-107.
    2. Shaohua Chen & Martin Ravallion, 2010. "The Developing World is Poorer than We Thought, But No Less Successful in the Fight Against Poverty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(4), pages 1577-1625.
    3. Adams, Richard Jr., 2004. "Economic Growth, Inequality and Poverty: Estimating the Growth Elasticity of Poverty," World Development, Elsevier, vol. 32(12), pages 1989-2014, December.
    4. Fosu, Augustin Kwasi, 2017. "Growth, inequality, and poverty reduction in developing countries: Recent global evidence," Research in Economics, Elsevier, vol. 71(2), pages 306-336.
    5. Ms. Anne Epaulard, 2003. "Macroeconomic Performance and Poverty Reduction," IMF Working Papers 2003/072, International Monetary Fund.
    6. Chen, Shaohua & Ravallion, Martin, 2008. "China is poorer than we thought, but no less successful in the fight against poverty," Policy Research Working Paper Series 4621, The World Bank.
    7. Augustin Kwasi Fosu, 2015. "Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context," Oxford Development Studies, Taylor & Francis Journals, vol. 43(1), pages 44-59, March.
    8. Era Dabla-Norris & Kalpana Kochhar & Nujin Suphaphiphat & Franto Ricka & Evridiki Tsounta, 2015. "Causes and Consequences of Income Inequality; A Global Perspective," IMF Staff Discussion Notes 15/13, International Monetary Fund.
    9. Ms. Era Dabla-Norris & Ms. Kalpana Kochhar & Mrs. Nujin Suphaphiphat & Mr. Franto Ricka & Ms. Evridiki Tsounta, 2015. "Causes and Consequences of Income Inequality: A Global Perspective," IMF Staff Discussion Notes 2015/013, International Monetary Fund.
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    1. Wu, Haoyu & Atamanov, Aziz & Bundervoet, Tom & Paci, Pierella, 2024. "Is economic growth less welfare enhancing in Africa? Evidence from the last forty years," World Development, Elsevier, vol. 184(C).

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    More about this item

    Keywords

    growth; income; inequality; poverty; Africa; poverty transformation efficiency vector (PTEV); JEL classification: D31; I32; O11; O49; O55;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other

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