Growth is good for whom, when, how? Economic growth and poverty reduction in exceptional cases

This paper seeks to identify pathways to poverty reduction other than economic growth. It focuses on exceptional cases where specific political, social or economic factors explain a pattern of economic growth and poverty reduction. It analyses two types of cases: those in which income growth of the poor was significantly lower than expectations (‘negative exceptions’), and those in which income growth of the poor significantly exceeded expectations (‘positive exceptions’). It argues that, on average, growth does benefit the poor as much as anyone else in society, and so standard growth-enhancing policies should be at the centre of any effective poverty reduction strategy.

Using a prediction model, the paper relates cases in which the reported annual change in income of the poor has exceeded expectations. These 'positive exceptions' were a result of the following factors:

• progressive redistribution
• social welfare programmes
• social democracy
• liberal policies/structural readjustment
• stability/opportunities accessible by the poor. 

It also refers to cases in which reported annual change in income of lowest quintile fell below the model’s predictions. These 'negative exceptions' were a result of alternative factors, such as:

• regressive redistribution
• structural adjustment programmes
• violence/chaos
• corruption/debt.
  

Overall this paper recommends that policy-makers aiming at alleviating poverty should consider other factors than just economic growth. It explains that many other approaches could be effective in reducing and alleviating poverty as well as providing hope - and alternatives - to economies in which growth has been either elusive or too slow to do so.