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Economic Growth and Poverty Alleviation

Two more flagship studies, Bessel and Cord present conclusive arguments through cross country empirical evidence that on average, 1% increase in per capita income reduced poverty by 1 . 7% per cent. (Appendix: Figure 2. 2 and Figure 2. 3) In Bessel and Cord (2007) above, two authors Menses-Folio and Voicelessly (p. 219-243) draws on Brazier’s experience in creating pro-poor growth. In the book overview, Cord (p. 9) agrees that growth elasticity of poverty is negatively related to initial inequality and any increases in inequality further increase poverty incidence.

He further states, “The factors conducive to pro-poor growth are those that improve the level of income and decrease income inequality’. This view is shared by the opponents of the current debate too. Ravioli (2001) too observes the chance of growth being accompanied by increasing r decreasing inequality is roughly equal. However, a series of studies using cross- country data suggest that growth has neither a positive nor a negative effect on inequality. Chin and Ravioli, 1997; Easterly, 1999; Dollar and Kraal, 2002; Ravioli, 2004, 2007) Biracial and London (1997) argue that social divide is created by the “initial assets” while DIF (2008) warns any attempt of asset re-distribution may have an adverse effect on the incentives to save and invest. Nevertheless, rising inequality in the developing world, spurred by liberalizing and globalization, is a major concern for many economists. Stilling (2013) and Millennial (2005) observe that a race to the bottom has been created by asymmetric globalization.

In the Lewis Theory (Toward and Smith, 2011), surplus labor from the rural subsistence sector is gradually transferred to urban industrial sector for higher productivity. The rural-urban migration, in the long run, may result in urban unemployment, wage decrease, loss of agricultural productivity, debt accumulation, monopolizing, lack of access to credit and insurance, and social exclusion. Martyr Seen (1999) described economic growth as a crucial means for expanding the abstractive freedoms that people value.

But in reality, in India, more than 270,000 farmers caught in a debt trap have committed suicide since 1995. (Shiva, 2013; stagnant 2013) According to Gin index , global inequality is 0. 7 points today (Millennial, 2005) while it is between 4. 5 – 4. 7 for developing countries that saw a proliferation of economic The Sunset’s curve , on the other hand, tells a different story about inequality. (Sunsets, 1955; Appendix: Figure 2. 6). The inequality seen in developing countries is part of the development and will phase out as more growth is achieved.

However, The Sunsets hypothesis has been one of the most debated issues in development economics. Bannered et al (2006) explains the reasons for the drop in inequality in industrialized countries during the 20th century was not related to the optimistic trickle-down process advocated by Sunsets theory. For developing countries, high inequality is not necessarily a sign of growth or an expectation that the trend will reverse in a spontaneous fashion. Inequality, rather, can have harmful effects on the growth. Ravioli and Chuddar (2007) speaks about “Good Inequality’ (egg. That fosters entrepreneurship) and “Bad Inequality’ (I. E. , geographic and human resources traps) wherein the latter is capable of driving out the former. Some view the rise of developing countries as convergence. But historically the trend of mobility among countries has been in opposite directions. Table 2. 7 in the Appendix shows poor countries have seen a downward trend while rich countries too have seen an upward mobility (Aqua, 1993, cited by Reality Idioms, 2013) Another crucial point is the spatial dimensions of the problem.

In his latest book, Global Poverty and the New Bottom Billion, Andy Sumner (2010) highlights that poverty is no longer a Low Income country issue; for currently % of the world poor (approve. 1. 3 Billion) live in Middle Income countries. According to new World Bank classification, (see footnote 1) many Lies have been graduated to Miss. This suggests that world poverty is turning from an international to a national distribution issue and internal politics, inequality, domestic taxation, redistribution policies are becoming of growing importance visa-Г-visa economic growth.

Islam (2004) identifies a gap in the literature that advocates a direct correlation between income growth and poverty reduction. Through an empirical analysis, he demonstrates that there is no invariant relationship between growth and poverty reduction. For, the pattern and sources of growth as well as the redistribution mechanism are important from the point of view of achieving the goal of poverty reduction. BIG COMPARISON During the past three decades, China, India and Brazil – with a population count of 2. 7 Billion in their countries – have attained extraordinary levels of economic progress. Cravings, 2006; Chary, 2004; Camps et al, 2002) China’s GAP grew at an average rate of 10. 4 per cent, India at 10. 3 per cent and Brazil at 7. Per cent per During this period of rapid economic growth, China alone has lifted over 200 million people out of poverty (Asian, 2002). Indian’s poverty rate fell from 42% to 24% while Brazier’s “$3-a-DaY’ poor populace decreased from 17% to 8% (Ravioli, 2009). What were the main drivers of economic growth in BIG countries? What were the approaches to reduce poverty?

Are there any factors that impede sustainable and pro-poor growth? A. Drivers of Economic Growth: BIG experienced few common factors. The reforms appeared as a in the backdrop of a crisis-response. As a result, growth-promoting policy reforms were implemented. BIG also liberalized the markets and exposed local producers to foreign trade. An alternative view is put forward by Radio and Submarine (2004) who argue Indian’s growth started in asses with government’s attitudinal shift towards reform. However, certain factors of growth were exclusive to one or two of them.