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Pro-poor growth is today the paradigm that is expected to lead to poverty reduction. It consists in a combination of robust, broad-based growth and improved access to social services (OECD, 2001). In the 1990s the world experienced an average growth of 2.6 per cent per capita which although considered to be a reasonable rate of growth, the number of the world's poor remained the same. According to some World Bank studies, the growth of mean income plays an important role in overall poverty reduction but it only explains half of the growth income of the poor. Thus, even if there is a relation between growth and poverty, it is at best partial (Dollar and Kraay, 2000; Ravallion, 2000). The ‘pro-poor’ dimension now systematically emphasized by all international agencies clearly witnesses that even for those who believe in growth as a key factor for poverty reduction, it does not work systematically that way. Inequalities are also considered as a major issue both within countries (OECD, 2001) and between countries (World Bank, 2007).
Thus, in designing and implementing policies that simultaneously favour the creation of wealth and poverty reduction, two dimensions must be addressed: growth and equity. As pointed out by Ravallion (2004) "the task of making growth more pro-poor (meaning more poverty reducing) entails some combination of higher growth and a more pro-poor distribution of the gains from growth".
This is where the concept of ‘equity’ fits, helping to take into consideration this redistribution dimension. Equity defined here as "the state, quality, or ideal of being just, impartial, and fair" relates to the way the gains of growth are redistributed towards the poor in the society.
The combination of growth and equity within a matrix provides a useful analytical framework to assess to what extent a particular policy has the characteristic and potential for generating the desired pro-poor growth. The matrix below shows how such an analytical framework can be created. It was used in a study of smallholder contribution to growth and equity in Indonesia (Bourgeois, 2002). It crosses three levels of growth and equity, resulting in a nine-cell table that provides a typology of policies. Each cell indicates the nature of a policy according to its contribution to growth and equity.
The policies located in the three cells at the lower left part of the table form a set of redistributive-type of policies aiming at preserving or enhancing the welfare of the poor under less favourable growth conditions. They lead to situations where the social dimension is at the forefront through social protection, social reform, or social security. Land reform, safety nets and social programmes belong to these policy types. In the three cells that are diagonally opposite to them, policies tend to support growth without considering fair redistribution towards the poor. They lead to further discrimination against the poor either by rising inequality, marginalization or polarization. Many policies promoting agricultural productivity based on technologies that poor farmers cannot afford or on market mechanisms that exclude subsistence farmers fall into these categories.
The three cells on the diagonal line that goes from the lower right to the upper left cell represent three contrasted states, ranging from full recession (the worst case of lower growth and lower equity) and stagnation (no change in growth and equity) to pro-poor growth, the desirable case of growth and poverty reduction.
Pro-poor growth appears here as only one case in a growth-equity two-dimensional space. While it is understandable that it represents the most desirable situation where increased redistribution is made acceptable by increased benefits for all, the matrix shows also that pro-poor policies are not always necessarily linked with a higher and simultaneous growth and equity.
Actually, a policy is never implemented in isolation. It is part of a more general strategy and policy coherence is a key issue. Coherence, which relates to the simultaneity of policy design, implementation and interaction, has two dimensions: co-ordination and consistency (OECD, 2001). While co-ordination relates more to the important process of designing policies, consistency is about ensuring that individual policies are not internally contradictory, and identifying those that are incompatible with the attainment of a given objective, such as poverty reduction. Assessing policy consistency is a challenge and a growth-equity matrix such as the one presented above has potential as a tool. It may provide not only a useful framework for designing and monitoring pro-poor policies, it can be used to ensure overall policy coherence as well.
Written by Robin Bourgeois, IS/DB Programme Leader, UNESCAP-CAPSA, Bogor, Indonesia.
(References available upon request) |
