Income and Multidimensional Poverty in Developing Countries: A Cross-Sectional Perspective

Although response of income-poverty to economic growth has been studied extensively by development economists, there seems no work that looks at the role of income-growth in alleviating multidimensional poverty (MDP). To fill this gap, responsiveness of MDP to increase in real GDP per capita is studied for a large cross-section of nearly 100 developing countries around the period 2005-2010. Information on MDP is taken from Human Development Report, while that on GDP per capita is based on World Bank web site. The estimates indicate the income elasticity of MDP to be unity (-1) for the entire sample. It implies that, if percapita income growth in developing countries is of the order of 3% per year, income growth by itself will take more than 23 years to reduce MDP by one-half while Sustainable Development Goals (SDGs) aim at reducing, during the next 15 years, "at least by half...poverty in all its dimensions". Therefore, income growth alone is unlikely to lead to the attainment of the SDG target for MDP, and additional efforts by governments would probably be needed.