Dynamic and Long-Term Linkages Among Growth, Inequality and Poverty in Developing Countries

51 Pages Posted: 17 May 2014

See all articles by Katsushi S. Imai

Katsushi S. Imai

University of Manchester - School of Social Sciences

Raghav Gaiha

University of Delhi - Department of Economics; Australian National University (ANU)

Date Written: March 12, 2014

Abstract

Drawing upon a cross-country panel data for developing countries, the present study sheds new empirical light on dynamic and long-term linkages among growth, inequality and poverty. First, agricultural sector growth is found to be consistently the most important factor in reducing inequality and poverty not only through its direct effects but also through its indirect effects. Second, there is a significant and negative association between inequality and GDP per capita, with macro institutional quality as one of the important factors in determining the inequality-growth relationship. Third, policies designed to prevent conflicts and mitigate their disruptive effects and violence, stabilise commodity prices, and enhance institutional quality would help eliminate worst forms of deprivation. Our analysis points to a drastic shift away from rural-urban migration and urbanisation as main drivers of growth and elimination of extreme poverty, and towards revival of agriculture in the post-2015 policy discourse. Indeed, the case for urbanisation rests on not just shaky empirical foundations but could mislead policy makers and donors.

Keywords: Inequality, Poverty, Growth, Agriculture, Non-agriculture, MDG

Suggested Citation

Imai, Katsushi S. and Gaiha, Raghav, Dynamic and Long-Term Linkages Among Growth, Inequality and Poverty in Developing Countries (March 12, 2014). Brooks World Poverty Institute Working Paper No. 198. Available at SSRN: https://ssrn.com/abstract=2437524 or http://dx.doi.org/10.2139/ssrn.2437524

Katsushi S. Imai (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Raghav Gaiha

University of Delhi - Department of Economics ( email )

Delhi-110007
India

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

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