When Does Growth Trickle Down to the Poor? The Indian Case

Posted: 20 Jun 2008

See all articles by Santonu Basu

Santonu Basu

South Bank University - Department of Economics

Sushanta Mallick

Queen Mary - University of London

Date Written: May 2008

Abstract

A theoretical analysis and several econometric tests have been undertaken to examine whether the trickle down effect took place in rural India over a long time period. We found little evidence to suggest that the trickle down effect had occurred at all; our analysis suggests that the emergence of capital-labour substitution was primarily responsible for preventing growth from reducing poverty. The decline in poverty and a higher growth rate that took place during the late 1970s and 1980s were largely a result of government anti-poverty measures teamed with the more equitable distribution of credit and inputs to smaller and marginal farmers.

Keywords: Trickle down effect, Rural poverty, Economic growth, Capital formation

JEL Classification: O1

Suggested Citation

Basu, Santonu and Mallick, Sushanta K., When Does Growth Trickle Down to the Poor? The Indian Case (May 2008). Cambridge Journal of Economics, Vol. 32, No. 3, pp. 461-477, 2008, Available at SSRN: https://ssrn.com/abstract=1148616 or http://dx.doi.org/10.1093/cje/bem053

Santonu Basu (Contact Author)

South Bank University - Department of Economics ( email )

103 Borough Road
London SE1 0AA
United Kingdom
+44 (0)20 7815 7098 (Phone)

Sushanta K. Mallick

Queen Mary - University of London ( email )

School of Business and Management
Mile End Road
London, England E1 4NS
United Kingdom
+44 20 7822 7447 (Phone)

HOME PAGE: http://webspace.qmul.ac.uk/skmallick/

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