Press release
29 June 2005
New study provides insights on how to increase the impact of economic growth on poverty reduction
 |
 |
 |
 |
The study, entitled Pro-Poor Growth in the 1990s: Lessons and Insights from
14 Countries, presents evidence that underscores the importance of promoting
strong and sustained growth as part of any pro-poor growth strategy. It also
demonstrates the need to implement policies that enhance the ability of poor
households to participate in growth.
The study forms part of a joint work programme sponsored by The World Bank,
Agence Française de Développement (AFD), German Development Policy (BMZ, GTZ,
KfW) and the UK Department for International Development (DFID).
The evidence presented in the report draws on 14 country case studies, which
analyze the distributional pattern of growth and how it was affected by specific
country policies and conditions. The case studies include: Bangladesh, Bolivia,
Brazil, Burkina Faso, El Salvador, Ghana, India, Indonesia, Romania, Senegal,
Tunisia, Uganda, Vietnam, and Zambia.
"The power of economic growth in reducing poverty is undeniable," said Danny Leipziger, Vice President of the World Bank's Poverty Reduction and Economic Management network. "We know that poverty declines rapidly where growth is rapid and sustained. Poverty hardly falls and may even stagnate where growth is slow and uneven. Policy makers who seek to reduce poverty would therefore be well advised to implement policies that enable their countries to achieve a higher rate of growth. The sensitivity of poverty reduction to growth can also vary significantly across countries. So, it is important to enhance the capacity of poor people to participate in growth. The 14 case studies provide important lessons about what has and has not worked in these countries to increase the incomes of poor households"
Gareth Thomas, UK international development minister said:
"Achieving and maintaining economic growth is essential in the fight against poverty. So is ensuring that poor people benefit from growth. This study tells us more about how to accelerate growth in ways that reduce poverty. It provides valuable insights for decision makers in developing countries and development assistance agencies.
"As leaders of the G8 prepare to meet next month, this study should encourage us to work closely with developing country governments to help ensure their economic success and the inclusion of poor people in that success."
Pierre Jacquet, Chief Economist at Agence Française de Développement said:
"The pro-poor growth approach widens our vision of the fight against poverty by recognizing that beyond the mere social dimensions, poverty reduction has first to do with economic development and growth. Thanks to this approach, a large panel of sectoral policies (infrastructures, rural development...) is reintegrated in the debate. Indeed there is ample evidence that such policies can be designed so as to make the poor benefit."
Erich Stather, State Secretary of the German Ministry for Economic Cooperation and Development, added:
"We need growth processes which integrate the poor rather than exclude them, that is, growth processes which use the economic potentials of the poor rather than marginalize them".
The study pays particular attention to the role of labor income (both from
wage and self-employment). It identifies several policy interventions that were
important in raising agricultural incomes of poor households in the 1990s. These
include lowering transactions costs to access markets through investments in
roads, encouraging contract farming and producers' organizations, strengthening
property rights to improve land access for smaller farmers, enhancing investment
incentives and supporting opportunities for out-migration. The study also
recognizes the importance of expanding technology available to smallholder
producers in arid climates and helping poorer and smaller producers deal with
price and climate risk. Finally, it stresses the need to create an incentive
framework that benefits all farmers and takes into account the differential
impact of price and trade policy reforms on poor households.
Similarly, the study highlights several broad policy options to help poor
households take advantage of nonagricultural and urban employment opportunities.
They include improving the investment climate; expanding access to secondary
education given the rising skill premium that tended to accompany strong
nonagricultural growth in the 1990s; enhancing access of girls to all levels of
education; designing labor market regulations to create more formal employment
for poor workers, and improving access to infrastructure, particularly roads and
electricity, to better link rural areas to small towns and urban centers.
As conditions vary across countries, pro-poor growth strategies must be
country-specific. The study identifies several country conditions to illustrate
how they may impact the ability of poor households to participate in growth. For
example, population density and the degree of urbanization affect transactions
costs and the ability of poor households to participate in agricultural and
nonagricultural growth. The extent of initial asset and income inequality not
only influences the sensitivity of poverty to growth, but may also point to
gender or ethnic discrimination or other inequality traps that keep certain
groups of poor households from participating in growth. In addition, the
relative importance of agriculture in the economy and the workforce will
influence the importance of raising agricultural earnings if growth is to
translate into rapid poverty reduction.
The study will be launched in London at a conference hosted by DFID on behalf
of the four sponsoring partners. The conference will bring together participants
from partner governments, multilateral, regional and bilateral donor agencies,
non-governmental organizations, academia, media and other development
organizations. It is designed to provide a forum to discuss strategies and
policy recommendations for pro-poor growth and to improve donor coherence in
understanding the relationship between growth and poverty reduction. The
conference complements regional workshops in Asia and Africa as well as events
in several of the 14 case-study countries.
If you would like to attend the event or would like more information please contact Yasser Mehmood in the DFID press office on 00 44 (0) 20 7023 0620 or e-mail y-mehmood@dfid.gov.uk
