Growth (But Not Only) Is Good for the Poor
Many low-income countries, such as Haiti, have high ambitions and socioeconomic needs to achieve substantial income growth, especially for the poorest income quintiles. This situation raises the question of policy prioritization, which is often difficult to address, since reliable country-specific micro data are scarce in most low-income countries. Although many studies have investigated the determinants of growth of gross domestic product, less is known about the factors influencing household incomes at the lowest segments of the income distribution. Focusing on the specific case of Haiti, a country with one of the lowest income levels, this paper proposes an approach to handle this challenge: it estimates income drivers for the poorest two income quintiles from cross-country regressions. The results suggest that maintaining macroeconomic stability as well as investing in human and physical capital would not only be associated with faster overall economic growth, but also with even faster income growth for the poorest segments of the population. Thus, there need not be a trade-off between inequality and growth. Economies could foster faster growth while also increasing inclusiveness, ensuring that everyone can live up to their potential.
| Main Authors: | , , |
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| Format: | Working Paper biblioteca |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017-02
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| Subjects: | shared prosperity, economic growth, poverty reduction, inequality, education, infrastructure, macroeconomic stability, panel data, income distribution, low-income country, income drivers, |
| Online Access: | http://documents.worldbank.org/curated/en/225341487259094529/Growth-but-not-only-is-good-for-the-poor-some-cross-country-evidence-to-promote-growth-and-shared-prosperity-in-Haiti https://hdl.handle.net/10986/26142 |
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| Summary: | Many low-income countries, such as
Haiti, have high ambitions and socioeconomic needs to
achieve substantial income growth, especially for the
poorest income quintiles. This situation raises the question
of policy prioritization, which is often difficult to
address, since reliable country-specific micro data are
scarce in most low-income countries. Although many studies
have investigated the determinants of growth of gross
domestic product, less is known about the factors
influencing household incomes at the lowest segments of the
income distribution. Focusing on the specific case of Haiti,
a country with one of the lowest income levels, this paper
proposes an approach to handle this challenge: it estimates
income drivers for the poorest two income quintiles from
cross-country regressions. The results suggest that
maintaining macroeconomic stability as well as investing in
human and physical capital would not only be associated with
faster overall economic growth, but also with even faster
income growth for the poorest segments of the population.
Thus, there need not be a trade-off between inequality and
growth. Economies could foster faster growth while also
increasing inclusiveness, ensuring that everyone can live up
to their potential. |
|---|