Pro‐poor growth: explaining the cross‐country variation in the growth elasticity of poverty

Abstract

Purpose

The aim of this paper is to analyse the cross‐country variation in the growth elasticity of poverty across a sample of developing countries during the period from 1990 to 2000.

Design/methodology/approach

In order to identify variables that may explain the cross‐country variation in the growth elasticity of poverty, the paper sets up a theoretical framework. Subsequently, the explanatory power of these variables is tested empirically by panel data econometric analysis.

Findings

For a sample of 52 low and middle income countries, it is found that the level of initial income inequality, credit available to the private sector, literacy, the extent of business regulations and trade openness are important determinants of the growth elasticity of poverty.

Practical implications

Countries that reduce regulatory burdens, improve literacy, increase access to finance, undertake land reforms (asset redistribution), and provide safety nets while liberalizing trade can create more growth and ensure that it is pro‐poor.

Originality/value

The paper identifies variables (at a cross‐country level) that may guide the conscious policies which create pro‐poor growth.

Citation

Chhibber, A. and Nayyar, G. (2008), "Pro‐poor growth: explaining the cross‐country variation in the growth elasticity of poverty", International Journal of Development Issues, Vol. 7 No. 2, pp. 160-176. https://doi.org/10.1108/14468950810909123