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Poverty Reduction Is An Essential Development Goal

Poverty relief is an essential goal of both developed and emerging countries (United Nations 2002). The success of each country’s development strategy has a significant impact on how poverty outcomes vary. When comparing the experiences from a variety of developing countries, research consistently shows that rapid and sustainable growth is the best way of decreasing poverty. The most common conclusion from cross-country research is that a 10% rise in the average income of a country will lower poverty by 20-30% (Adams R. 2002).

In order to determine the impact of growth on poverty reduction, it is important to know how high the income inequality was at its beginning. In order to determine how effective growth is in reducing poverty, one must consider the impact of income inequality on poverty. For instance, a one percent increase in income level could lead to a reduction in poverty of 4.3 percent in countries that have very low inequality, and as low as 0.6 percentage in countries where there is high inequality (Ravallion 2007. It is possible for inequality to rise alongside growth. However, poor people may not be able to reap the benefits of growth. However, growing inequality is not a result of growth as such. Some research suggests that growth can cause inequality. But empirical evidence shows that income fluctuations and inequality do not correlate.

According to Ravallion 2001, the chances of growing or decreasing inequality in developing countries over the past 20 years are roughly equal (Ravallion 2001). In many developing countries, inequality rates are lower or similar to those of developed countries. Many studies that used cross-country data to determine inequality’s effect on growth have found no positive or negative results (Chen, Ravallion, 1997).

This does not mean that countries with higher levels of growth have not experienced increased inequality. As India and China’s growth rates have increased in the 1990s, inequality has increased in both countries. If income inequality had not increased between 1992 – 2002, poverty rates in both Bangladesh and Uganda could have been higher. One study shows that 30% of Ugandans would be living in poverty at the end, if growth had been more equitable for the poor (Besley and Cord 2007).

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  • tommyperry

    I'm Tommy Perry, a 55-year-old educational blogger who enjoys traveling. I've been writing about education since 2012, and I hope to continue doing so for as long as I can. I also enjoy cooking and spending time with family and friends.

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