Economic Growth And Poverty

“One-third of the population of the world lived in poverty in 1981, whereas the share was 18 per cent in 2001. The decline is largely due to rapid economic growth in population rich countries like China and India. There are, however, remarkable differences between countries and between regions in the developing world. Some regions and countries, notably in East Asia, are rapidly catching up to industrialized countries. Others, especially in Sub-Saharan Africa, are lagging far behind and the share of poor people in the population has even increased in some countries industrial development.’’ (Chen and Ravallion, 2008)

Most scholars define economic growth as the increase in a country’s production capacity which is measured by the gross national

The relationship between economic growth, inequality and poverty is wide. For instance, where the initial rate of inequality is higher, the growth elasticity of poverty is likely to be higher because the poor population will be much further away from the poverty line. The relationship between growth and poverty is closely collaborated with inequality and how it affects the changes in growth. Diverse propositions advanced by various scholars about the links between the three are discussed, followed by an illustration using give a case study of Kenya. The essay closes with policy

The vast body of research on economic growth and poverty reduction has shown that the most effective way to sustainably reduce poverty is to raise the productivity of and returns to resources that poor people depend on for their livelihood. In almost all African countries, these resources are agricultural land, labor and off-farm rural labor. In fact, African countries with higher agricultural growth also exhibit lower poverty rates. This is not just due to higher incomes in the agricultural sector, but in addition to the fact that higher agricultural incomes also tend to induce even higher incomes outside of the agricultural sector and the rural economy. For African countries, there is evidence that a $1.00 dollar increase in farm income results in an additional increase in rural incomes from $1.5 to $2.5. The importance of agriculture increases even more when one considers the very strong interrelationships between agricultural growth and the broader socioeconomic and human development goals. It is now well understood that poor agricultural growth is highly correlated with the prevalence of hunger and