Columbia International Affairs Online: Working Papers

CIAO DATE: 05/2011

Growth, Inequality, and Poverty Reduction in Developing Countries

Augustin Kwasi Fosu

January 2011

United Nations University

Abstract

The study presents recent global evidence on the transformation of economic growth to
poverty reduction in developing countries, with emphasis on the role of income
inequality. The focus is on the period since the early/mid-1990s when growth in these
countries as a group has been relatively strong, surpassing that of the advanced
economies. Both regional and country-specific data are analysed for the US$1.25 and
US$2.50 level poverty headcount ratios using the most recent World Bank data. The
study finds that on average income growth has been the major driving force behind both
the declines and increases in poverty. The study, however, documents substantial
regional and country differences that are masked by this ‘average' dominant growth
story. While in the majority of countries growth was the major factor behind falling .../