Growth versus Distribution: Does the Pattern of Growth Matter?

Abstract

Despite the fashion for pro‐poor growth, there remains no consensus as to its meaning. This article proposes three possible definitions, and examines the pattern of growth over time and in different world regions. The growth of the poor's income can be broken down into a growth effect and a distribution effect. In 143 growth episodes, it is found that the growth effect dominates. However, in over a quarter of cases changes in distribution played a stronger role than overall growth in increasing income for the poor. Econometric analysis of growth regressions for each population quintile supports the idea that openness benefits everyone, but indicates a robust perverse relationship with governance. There is also evidence of a trade‐off between growth and distribution, suggesting that attention to distribution will be better for the poor than going for growth.