Growth, inequality and poverty: looking beyond averages

The poor in developing countries typically share in the gains from rising aggregate affluence, and in the losses from aggregate contraction. Inspired by this evidence, this World Bank paper calls for deeper empirical work on growth and distributional change.

In light of the aggregate trends, the paper asks the following questions:

• How much do people share in growth?
• Do they gain more in some settings than in others?
• Do some gain while others lose?
• Does pro-poor growth mean more or less aggregate growth?

The article concludes that:

• The poor typically share in the benefits of rising affluence, and they typically also suffer from economic contraction. However, there is a sizeable variance around the "typical" outcomes for the poor.
• There are also differences in initial inequalities between countries, and between regions within countries, that create sizeable differences in how much the poor share in aggregate growth or contraction.
• There is a need for more micro, country-specific, research on the factors determining why some poor people are able to take up the opportunities afforded by an expanding economy (and so add to its expansion) while others are not.
• While good policy making for fighting poverty must obviously be concerned with the aggregate impacts on the poor, it cannot ignore the diversity of impacts underlying the averages, and it is here that good micro empirical work can help. That diversity also holds potentially important clues as to what else needs to be done by governments to promote poverty reduction, on top of promoting economic growth.