Redistribution does matter: growth and redistribution for poverty reduction

This paper situates itself in a recent debate within the development literature. The literature is ambiguous. On the one hand poverty reduction is prioritised as is possible growth enhancement from a more equal distribution of assets and income. On the other hand economic growth is considered to be no more than distribution neutral.

This paper concludes that:

• a redistributive growth path is always likely to be superior to a distribution neutral path ('trickle down') for reducing poverty
• a redistributive growth path is always superior if a country's per capita income and inequality are relatively high
• a static redistribution from the rick to the poor is superior to a redistributive growth path in its effect on poverty for most countries, but not all