africa

Yale Center for the Study of Globalization
among growth, inequality, and poverty has to be analyzed and understood. The
growth-inequality-poverty nexus is at the heart of the anatomy of growth. This interrelationship
was formalized by Bourguignon (2004) into a triangle linking the three
concepts Growth, Inequality, and Poverty (G-I-P). Each link of this triangle needs to
be scrutinized to understand the impact of growth on inequality and poverty. GDP
growth contributes positively to poverty reduction but, depending on its pattern, it can
reduce or worsen inequality. In turn, inequality operates as a filter between growth
and poverty reduction. A major feature of the pattern of growth in Africa has been
and remains the very low elasticity of poverty reduction with respect to growth as
compared particularly to Asian developing countries. Growth that generates high
inequality will only have a minor effect on poverty. 16
An important link in the G-I-P triangle is the reverse link between poverty and
subsequent (future) growth. Ravallion (2012) found, based on a sample of almost
100 countries covering the period from 1980 to the present, that high initial poverty
rates have sizeable negative impacts on the subsequent growth rate. Hence the
high initial incidence of poverty in a given country will act to dampen or retard future
growth. Fosu (2012), in a study of the G-I-P interrelationship within the context of
SSA, echoes this finding in concluding that “… the relatively low levels of income
appear to be a major culprit for retarding the effectiveness of income and inequality
improvements for poverty reduction in SSA countries generally.”
On the basis of those studies and much additional information, I have argued in favor
of a pro-growth poverty reduction strategy to complement the more conventional
pro-poor growth strategy. The underlying logic of pro-growth poverty reduction “is that
by attacking poverty directly and reducing it, some major constraints on the behavior
of the poor will be removed, making it possible for the poor to contribute to growth.
They will be better able to acquire more education and skills, invest in their farms
and informal activities, and adopt riskier but more productive technologies (such
as high-yielding seed varieties in small-scale agriculture)” (Thorbecke, 2014a: 16).
Appropriate policy and institutional interventions alleviating poverty directly (such as
labor-intensive infrastructure projects and social protection schemes that contribute
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