Studies showing the relationship
between growth and removal of
poverty
Working with time-series data, Ahluwalia, Carter, and Chenery (1979) and Fields (1980) found that an increase in poverty with growth is very much the exception. Fields (1991) tested the hypothesis that economic growth tends to reduce poverty and found that out of 18 countries, poverty fell in 14, rose in three and exhibited no clear tendency in one. Fields (1991) also found that rapid economic growth tends strongly to reduce poverty. The East Asian miracles are sufficient proof of this.
In the same vein, the contrary position, of economic decline, is seen to increase poverty. Addisson and Demery (1985), World Bank (1986), Edgren and Muqtada (1986), and Lee (1987) find that this is what happened in many developing countries that experienced negative economic growth in the 1980s. In two of the three cases where poverty rose, the economies suffered an economic decline.
References
Addisson , Tony and Lionel Demery (1985). Macro-economic Stabilization, Income Distribution and Poverty: A Preliminary Survey. London: Overseas Development Institute, Working Paper no. 15.
Ahluwalia, Montek, Nicholas Carter and Hollis Chenery (1979). "Growth and Poverty in Developing Countries," in Chenery, Hollis (1979). Structural Change and Development Policy. New York: Oxford University Press.
Edgreen, G and M. Muqtada (1986). "Adjustment Under Decelerating Growth: The Asian Experience," in ILO (1986). Stabilization, Adjustment and Poverty. International Employment Policies Working Paper no.1, July 1986.
Fields, Gary S. (1980). Poverty, Inequality and Development. New York: Cambridge University Press.
Fields, Gary S. (1991). ' Growth and Income Distribution' in Psacharopoulos, George (editor) (1991). Essays on Poverty, Equity and Growth. Oxford: Pergamon Press.
Lee, E. (1987). " World Recession and Developing Economies in Asia," in ILO (1987). World Recession and Global Independence: Effects on Employment, Poverty and Policy Formation in Developing Countries. Geneva: ILO.
World Bank (1986). Poverty in Latin America: The Impact of Depression, Washington: World Bank.