Does economic growth reduce multidimensional poverty? Evidence from low- and middle-income countries

Bibliographic Data

ID11911208
AuthorsP Balasubramanian (0000-0002-9450-1206, German Institute of Development and Sustainability), F Burchi (0000-0003-2095-5181, German Institute of Development and Sustainability, corresponding author), Daniele Malerba (0000-0002-8858-1684, German Institute of Development and Sustainability)
Year2022
Volume161
Pages106119-106119
Publication date2022-10-15
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueWorld Development (JOURNAL)
Journal identifiersISSN: 0305-750X • E-ISSN: 1873-5991
PublisherElsevier BV (PUBLISHER)
DOI10.1016/j.worlddev.2022.106119
OpenAlexW4306253895
LanguageEN
Citations received25
References cited36

The long-standing tradition of empirical studies investigating the nexus between economic growth and poverty concentrates mainly on monetary poverty. In contrast, little is known about the relationship between economic growth and multidimensional poverty. Consequently, this study seeks to assess the elasticity of multidimensional poverty to growth, especially in low- and middle-income countries. The study employs two novel, individual-based multidimensional poverty indices: the G-CSPI and the G-M0. It relies on an unbalanced panel dataset of 91 low- and middle-income countries observed between 1990 and 2018: this is thus far the largest sample and the longest time span used in the literature to address this research question. Within a regression framework, we estimate the growth elasticity of multidimensional poverty using the first difference estimator. Our study finds that the growth elasticity of multidimensional poverty is −0.46 while using the G-CSPI and −0.35 while using the G-M0: this means that a 10% increase in GDP decreases the multidimensional poverty by approximately 4–5%. There is, however, heterogeneity in the results; in particular, the elasticity is higher in the second sub-period (2001–2018) and for countries with lower initial levels of poverty. Furthermore, a comparative analysis reveals that the elasticity of income-poverty to growth is five to eight times higher than that of multidimensional poverty. In conclusion, our results indicate that economic growth is an important instrument to alleviate multidimensional poverty, but its effect is substantially lower than that on monetary poverty. Therefore, future research should identify other factors and policies, such as social policies, to substantially reduce multidimensional poverty

Demographic economics · Developing country · Development economics · Econometrics · Economic growth · Economics · Nexus (standard · Panel data · Poverty · Fiscal Policy and Economic Growth · Income, Poverty, and Inequality · Poverty, Education, and Child Welfare

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