Is there a tradeoff between raising growth and reducing inequality and poverty? This paper reviews the theoretical and empirical literature on the complex links between growth, inequality, and poverty, with causation going in both directions. The evidence suggests that growth can be effective in reducing poverty, but its impact on inequality is ambiguous and depends on the underlying sources of growth. The impact of poverty and inequality on growth is likewise ambiguous, as several channels mediate the relationship. But most plausible mechanisms suggest that poverty and inequality reduce growth, at least in the long run. Policies play a role in shaping these relationships and those designed to improve equality of opportunity can simultaneously improve inclusiveness and growth.

One side in the current debate about who benefits from growth has focused solely on average impacts on poverty and inequality, while the other side has focused on the diverse welfare impacts found beneath the averages. Both sides have a point.

The relationship between growth, inequality, and poverty lies at the heart of development economics. This volume draws together many of the most important recent contributions to the controversies surrounding this topic. Some of the chapters help explain why there is profound disagreement on crucial issues of growth, poverty and inequality within academic circles, and among organizations and various groups active in the development field. Another central theme is the cross-country evidence on the relationship between growth and poverty, and the extent to which it is valid to draw policy conclusions from this empirical evidence. The volume also shows how new microeconomic techniques such as poverty maps and microsimulation models can be used to improve poverty analysis and the design of pro-poor policies. The overall conclusion points to the need for diverse strategies towards growth and poverty, rather than simple blanket policy rules. Initial conditions, specific country structures, and time horizons all play a significant role. Initial conditions affect the speed with which growth reduces poverty and can also determine whether policies such as trade liberalization have a pro-poor or an anti-poor outcome. Improved education is valuable in itself, and also contributes to poverty reduction; but its effect on inequality depends on supply and demand factors, which differ significantly across countries. Likewise, the quantitative impact on poverty of redistribution from the rich to the poor vis-a-vis an increase in total national income can vary greatly across countries. Hence the need for creative approaches to poverty which take full account of the specific circumstances of individual nations and which assign a central role to inequality analysis in the discussion of poverty-alleviation policies.

In this book Edward and Sumner argue that to better understand the impact of global growth on poverty it is necessary to consider what happens across a wide range of poverty lines. Starting with the same datasets used to produce official estimates of global poverty, they create a model of global consumption that spans the entire world’s population. They go on to demonstrate how their model can be utilised to understand how different poverty lines imply very different visions of how the global economy needs to work in order for poverty to be eradicated.

While Asia’s growth record in recent decades is remarkable, it has been marred by rising inequalities. This book looks at recent trends of income and non-income inequalities in developing Asian countries, discusses their underlying driving forces, and examines key policy issues that need to be addressed to ensure that the benefits of growth will be more equitably shared in Asia. The book also presents a set of country studies that provide rich information on growth, poverty and inequality dynamics and the policy challenges that arise in marching toward inclusive growth.

This paper examines the empirical relationship between inequality and growth, and analyzes the impacts of growth, inequality, and government spending on poverty reduction. A new panel dataset has been assembled on inequality and poverty that reduces measurement error and ensures comparability across countries and over time. The empirical results in this paper challenge the belief that income inequality has a negative effect on growth and confirm the validity of the Kuznets curve. Credit market imperfections in low- and medium-income countries are identified as the likely reason for the positive link between inequality and growth over the short-to-medium term. In the long term, inequality may have an adverse impact on growth.

This book reviews the fulfillment of two Millennium Development Goals (MDGs), namely poverty and inequality, in the Indian subcontinent. It examines the complex interplay among development, inequality and poverty in relation to corruption, environmental resource management, agricultural adjustment to climate change and institutional arrangements, with a special focus on the Northeastern region of the country. The topics covered offer a blend of theoretical arguments and empirical data with regard to the three main themes of the book, while also providing agricultural and environmental perspectives. The book also provides guidelines for policy initiatives for harnessing the region’s potential in the areas of industry, trade, sustainable use of mineral, forest and other natural resources, nature-based tourism through proper infrastructure development, and resolving land issues to achieve inclusive development.In addition to introducing some new questions on the development-ethnic conflict interface, it uses sophisticated tools such as the Blinder–Oaxaca decomposition method in consumption expenditure to show the endowment, and return to endowment effects; and techniques like spatial correlation-regression to analyze regional variation, co-integration, vector autoregression, the panel data technique and the adaptation index to climate change, to understand socio-economic complexities and the effect of the concerned variables on entrepreneurship and human development.The book offers a timely contribution to our understanding of major MDGs and highlights their successes and failures. It also includes analytical frameworks that are key to future policy initiatives. Further, it disseminates approaches and methods that improve livelihoods and standards of living through poverty reduction and promoting inclusive development along with sustainable utilization of available natural resources. Putting forward various ideas for creating a more sustainable future, it inspires and encourages readers to pursue further studies to address the gaps that still remain.