The Pattern of Growth and Poverty Reduction in China

33 Pages Posted: 20 Apr 2016

See all articles by Jose G. Montalvo

Jose G. Montalvo

Universitat Pompeu Fabra

Martin Ravallion

Georgetown University

Date Written: October 1, 2009

Abstract

China has seen a huge reduction in the incidence of extreme poverty since the economic reforms that started in the late 1970s. Yet, the growth process has been highly uneven across sectors and regions. The paper tests whether the pattern of China┬┤s growth mattered to poverty reduction using a new provincial panel data set constructed for this purpose. The econometric tests support the view that the primary sector (mainly agriculture) has been the main driving force in poverty reduction over the period since 1980. It was the sectoral unevenness in the growth process, rather than its geographic unevenness, that handicapped poverty reduction. Yes, China has had great success in reducing poverty through economic growth, but this happened despite the unevenness in its sectoral pattern of growth. The idea of a trade-off between these sectors in terms of overall progress against poverty in China turns out to be a moot point, given how little evidence there is of any poverty impact of non-primary sector growth, controlling for primary-sector growth. While the non-primary sectors were key drivers of aggregate growth, it was the primary sector that did the heavy lifting against poverty.

Keywords: Rural Poverty Reduction, Achieving Shared Growth, Regional Economic Development, Subnational Economic Development

Suggested Citation

Montalvo, Jose G. and Ravallion, Martin, The Pattern of Growth and Poverty Reduction in China (October 1, 2009). World Bank Policy Research Working Paper No. 5069, Available at SSRN: https://ssrn.com/abstract=1485974

Jose G. Montalvo (Contact Author)

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
08005 Barcelona
Spain

Martin Ravallion

Georgetown University ( email )

Washington, DC 20057
United States

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