Dealing with Poverty and Income Distribution Issues in Developing Countries: Cross-regional Experiences

Abstract

The paper deals with the major empirical poverty and income distribution issues in the context of developing countries. To focus attention it starts with a simple poverty decomposition framework where a change in poverty is shown to be the sum of a change due to economic growth and a change due to income distribution. It is shown that when the poverty line is a function of mean income, the elasticity of the poverty line with respect to income plays an important role in determining the size of the change due to growth. Using a recent set of data on income distribution for developing countries, the paper then looks at income inequality and poverty in three developing regions (Latin America, Asia and Sub-Saharan Africa). Empirical results on the Kuznets curve, initial inequality, and growth and adjustment and poverty are reported and policy implications are drawn.