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Poverty reduction needs growth, but the reverse also holds true

Ignacio Hernandez's picture

This is one of the main ideas proposed today in the presentation at the World Bank of the new flagship report  from the Latin America and the Caribbean Region "Poverty Reduction and Growth: Virtuous and Vicious Circles".

 

The report provides new evidence on the virtuous relationship between growth and poverty reduction: growth is key for poverty reduction. But it also suggests that the relationship can be vicious too: poverty may be hindering growth in Latin America. The report estimates that a ten percent decrease in poverty levels could increase economic growth by one percent in the region.

 

In the words of the World Bank's Chief Economist for Latin America and the Caribbean and co-author of the report, Guillermo Perry, in a recent interview:

 

The report defends the idea that poverty and growth are part of the same problem and therefore growth and direct poverty reduction strategies have to be part of the same solution.

Comments

Submitted by Rajaratnam Abel on
I am happy with this initiative. I hope to learn and contribute to this process. Thanks. Abel

Submitted by R-Squared on
"poverty may be hindering growth in Latin America. The report estimates that a ten percent decrease in poverty levels could increase economic growth by one percent in the region." I completely don't understand this statement. Don't you think that it is actually that one percent growth that reduces poverty level by ten percent? The causality run in the opposite direction.

Submitted by BP Agrawal on

One of the ideas in this report is that the relationship between growth and poverty can go both ways. So yes, growth may reduce poverty, but poverty reduction could also have a positive effect on growth.

Submitted by Paul on
a post related to the topic; Latin American Economies- Destiny or Choice http://truckandbarter.com/mt/archives/2006/03/latin_american.html

Submitted by danieloakland on
The report does not deny that growth reduces poverty (although this depends on many factors). The main point of the report is that poverty, through several mechanisms, can by a hindrance for growth. The authors of the flagship Report talk about a two-way causality.

It is believed that the growth helps in poverty reduction(but the growth should be sustained for the long-run). But the reverse also holds true i.e. the growth needs poverty reduction or poverty hinders the growth.Then how it is possible to sustain the growth in the presence of Poverty. So, Do you not think that the policy of Growth-manship shoould be reversed i.e. policy should be focused towrads poverty reduction that will be helpful in growth also as the Dr. Mehbub-ul-Haq once said:
We were taught to take care of our GNP as this will take care of poverty, Let us reverse this and take care of poverty as this will take care of the GNP

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