pro-poor

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pro-poor

Resource Booms and the PoorGraham A. Davis and Arturo VasquezDivision of Economics and BusinessColorado School of MinesGolden, Colorado, USA


The Claims:“Oil and mineral dependence produce a typeof economic growth that offers few directbenefits for the poor; moreover, oil andmineral dependence make pro-poor forms ofgrowth more difficult, due to the DutchDisease.”Michael Ross,Oxfam America 2001


“The political dynamics of resource-richcountries often lead to high levels ofinequality…”Joseph Stiglitz (2007),Making Globalization Work


“Mineral booms have strong effects on thelabor force; yet we know little about theirultimate impact on the vertical distribution ofincome.”Michael Ross (2007), inEscaping the Resource Curse(Humphreys, Sachs, and Stiglitz, eds.)


How Do the Poor Fare DuringResource Booms?Definition: A growth spell is pro-poor ifthe real income of the poor increases andincome inequality decreases.Definition: A growth spell is anti-poor ifthe real income of the poor decreases andincome inequality increases.All other outcomes are deemed ambiguous.


The Data• 171 “quality” growth spells (Deiningerand Squire data set) by income quintile,1959 to 1999• 58 developed and developing countries• growth spells range from 5 to 28 years,average 7 years


Extractive Economies in SampleNigeriaNorwayIndonesiaAlgeriaEcuadorMexicoPeruZambiaRussiaBolivia


Growth Spell Quality,Non-Extractive EconomiesTotal Growth Over Spell250%200%150%100%50%0%-50%-100%AmbiguousPro-poorAnti-poor0 5 10 15 20 25 30 35 40Length of Spell (years)


Growth Spell Quality,Extractive EconomiesTotal Growth Over Spell250%200%150%100%50%0%-50%-100%AmbiguousPro-poorAnti-poor0 5 10 15 20 25 30 35 40Length of Spell (years)


Results of Empirical Analysis• In a Logit panel data analysis, neither levelnor change in level of extractive activityduring a growth spell has a measurableimpact on the pro-poorness or anti-poornessof that growth spell• Positive growth tends to be good for the poor• Negative growth tends to be bad for the poor


Nigeria240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Indonesia240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Malaysia240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Venezuela240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Peru240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Jordan240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Chile240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Zambia240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Ghana240.00220.00200.00180.00160.00140.00120.00100.0080.0060.001959 1964 1969 1974 1979 1984 1989 1994 1999


Resource Booms and the Poor• No evidence that resource-led growth is lesspro-poor than other growth spells• Extractive economies tend to have pro-pooroutcomes during positive growth, and antipooroutcomes during negative growth• Negative association between resourcebooms and the poor may still be found ifone uses ambiguous definitions of pro-poorgrowth

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