Economic Growth And Poverty Reduction

This study examines the question of whether economic growth tends to reduce poverty, where poverty is measured by the incomes of the poorest 20% and 40% of a population.GDP growth of ten percent per year is associated with income growth of ten percent for the poorest 40% of the population. For the poorest 20% the elasticity of response is 0.921; GDP growth of 10% is associated with income growth of9.21%. These results give strong support to the proposition that growth in per capita GDP can be and usually is a powerful force in reducing poverty.