Pro-poor growth
Topic: Poverty and Inequality: Measurement and Policy · NCERT: Beyond NCERT
Meaning
Pro-poor growth is economic growth whose benefits reach the poor enough to cut poverty. It matters because growth alone does not always help the poor much. There are two definitions. Under the absolute definition (Ravallion), growth is pro-poor if the incomes of the poor rise at all. Under the relative definition (Kakwani), the incomes of the poor must grow faster than the average income. Only the relative definition requires inequality to fall.
Example
Suppose average income grows by 6% and the incomes of the poor grow by 4%. By Ravallion's absolute definition, this growth is pro-poor, because the poor gained. By Kakwani's relative definition, it is not pro-poor, because the poor grew more slowly than the average.
Don't confuse with
- Trickle-down growth: this assumes that growth alone will reach the poor over time. Pro-poor growth asks whether the poor actually gained, and by how much.
- Growth elasticity of poverty: this is the % fall in poverty for each 1% rise in mean income. It measures how strongly poverty responds to growth. It is not a definition of the kind of growth.