Poverty Reduction Through Economic Growth: Some Issues

In broad terms, reduction in poverty can come about through redistributions among households at an existing level of average income, or through growth in average incomes, or through a combination of the two. However, both theoretical and empirical considerations suggest that growth of average household incomes is likely to be necessary to achieve sustained long-term poverty reductions. But the pattern of this growth is important; clearly a growth pattern where the benefits accrue disproportionately to the richest in a society will have less poverty impact than one where the benefits are equally distributed or biased towards the poor. This is likely to be particularly important in countries where growth is likely to be slow. This paper reflects on the relationship between growth in household incomes, inequality and poverty. © 1997 by John Wiley & Sons, Ltd.