The Growth Elasticity of Poverty
On current trends, the future of global poverty reduction will be determined by Sub-Saharan Africa. Yet even during Sub-Saharan Africa’s period of high economic growth — roughly corresponding to the first decade and a half of the 2000s — the extent to which this growth translated into improved living standards for African households was hotly debated. This paper revisits the issue of Sub-Saharan Africa’s relatively low growth elasticity of poverty using a sample of 575 successive and comparable growth spells between 1981 and 2021. The findings confirm that, even controlling for initial differences in poverty, income levels, and inequality, Sub-Saharan Africa consistently had a significantly lower growth elasticity of poverty relative to other regions over this period. The lower growth elasticity of poverty, which has remained unchanged over time, is due to a lower passthrough between growth in gross domestic product per capita (or growth in household final consumption expenditure as measured by national accounts) and growth in household consumption expenditures as measured from surveys. Given the low passthrough of economic growth to households, Africa thus needs higher rates of economic growth than its peer countries in other regions to achieve equal rates of poverty reduction. Given the challenge of achieving this in the current global economic environment, success in reducing global poverty will require a focused effort to strengthen the effect of aggregate economic growth on household welfare in Sub-Saharan Africa. The results suggest that this will require (i) improved provision of basic education services and basic infrastructure, (ii) faster structural transformation, and (iii) a decrease in the occurrence and persistence of violent conflicts.
| Main Authors: | , , , |
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| Language: | English |
| Published: |
Washington, DC: World Bank
2024-02-01
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| Subjects: | GLOBAL POVERTY REDUCTION, GROWTH ELASTICITY, GROSS DOMESTIC PRODUCT PER CAPITA, AGGREGATE ECONOMIC GROWTH, |
| Online Access: | http://documents.worldbank.org/curated/en/099312502012418681/IDU1e36a6afa14bb414e6c192e61c45a54f4b453 https://openknowledge.worldbank.org/handle/10986/40997 |
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