When growth does – and does not – reduce poverty

Development is a widely used term that reflects more than economic growth. It also captures the degree to which a country’s wealth has kept up with or, better yet, surpassed population increases, how well any increased wealth is distributed throughout the population, and measures reflecting the quality of life.

Soon growth was portrayed as a panacea for many social, economic and political ailments: as a cure for public debt and trade imbalances, a key to national security, a means to defuse class struggle, and a route to tackling poverty without facing the politically charged issue of redistribution.

World Bank note on the subject added that with the drop in global demand, the poor would lose the market for their agricultural products, their casual jobs on construction sites, and their jobs in factories. Government budgets for schools, health facilities, and relief programs would be cut under the simultaneous pressure of reduced tax receipts an

Since 1950, the world has been on an unprecedented path of technological and economic convergence, and the gains have been much broader than income alone. Throughout the developing world, life expectancy has been rising, years of schooling have increased, rates of extreme poverty have been falling, and employment has been shifting away from manual

This logic operates in both directions. Capital-scarce economies grow faster because new investment is highly productive.

And of course it is likely that people feel more committed to educating their children when the economy is doing well, so perhaps growth causes education,

The interesting counterexample here is Latin America, for many years the example everyone used for growth with exploding inequality (which then turned into inequality with no growth), where the recent decades have seen a significant reduction in inequality. This was partly driven by rising commodity prices, but also in part by policy interventions,