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Perspectives on growth and poverty, United Nations University Press

Here the existing cross-country empirical evidence on the inequality effects of growth and the extent to which the poorest in society benefit from economic growth is reviewed. In the review of literature mainly empirical examples from 1990s are taken. In addition we test the conditional and unconditional relationship between inequality and growth post the World War II period based on the WIDER inequality database. The results from the literature will also be compared with those based on the WIID database. Empirical results suggest that the outcomes of policy measures are heterogeneous in their impacts. Economic growth benefits the poor but at the absence of effective redistribution policies which might affect negatively on the income distribution. Several country-specific factors play a significant role in targeting policies to make economic growth pro-poor. Ravallion (2001) expresses the need for deeper micro empirical work on growth and distributional change to identify specific policies to complement growth-oriented policies, and the evaluation of aggregate impacts and their diversity of impacts. Rest of the paper is organised as follows. Section 2 reviews the growth and convergence. It follows by a discussion of empirical evidence suggesting convergence in growth accompanied by divergence in inequality in Section 3. Section 4 explores the 1 The relationship between income inequality, poverty and globalization is discussed 3 linkage between openness and growth to inequality. Section 5 reviews the Kuznets hypothesis. The redistribution of growth is discussed in Section 6. The inequality effects of growth and development is discussed in Section 7 followed by a discussion of wage inequality in Section 8. The other contributing factors are discussed in Section 9. The relationship between growth and inequality based on WIID database is examined in Section 10. The final Section summarises.