Not All Growth is Equally Good for the Poor: The Case of Zambia

Abstract

Cross-country studies typically find growth to be the best means of alleviating poverty, with a less important role attributed to reducing inequality. However, shifts in the structure of growth can lead to very difficult poverty outcomes, with different population groups participating in the growth process. This article uses an applied general equilibrium and micro-simulation model to examine how the sectoral structure of growth in Zambia influences the degree of poverty reduction. Drawing on the country's recent growth history, the effects of accelerating growth in agriculture, mining and manufacturing are compared. Despite high urban poverty, a return to urban-based mining and manufacturing is found to be less favourable than faster intensification and diversification of agriculture, although broad-based growth is required for long-term poverty reduction. Therefore, while growth in general may be good for the poor, it is found that that not all growth is equally good.