Understanding Growth and Poverty: Theory, Policy, and Empirics

Raj Nallari and Breda Griffith, The World Bank (2011)

This volume is an introduction to the theories and policies that affect economic growth and poverty. It is a compilation of lecture notes used in face-to-face and e-learning courses presented by the World Bank Institute’s (WBI) Poverty Program during 2004–08. The Poverty Program is one of WBI’s core learning programs. The discussion is less technical than others, and the intended audience includes policymakers, policy analysts, and representatives of donor agencies and civil society organizations.

The volume is divided into three parts. Part I discusses basic concepts and measurement issues pertaining to poverty, national income, and economic growth. Part II deals with the macroeconomic policies that are critical for economic growth in the short term. It covers government-enforced fiscal and exchange-rate policies and the roles of financial institutions, development assistance (or aid), debt relief, and trade policies. Part III covers the structural and sectoral policies that affect longer-term economic growth and poverty reduction.

To underscore the impact of good governance and effective service delivery in growth and poverty reduction, separate chapters are devoted to institutional and technological development, education, health, labor, and land. Newer growth issues urbanization, regulation, infrastructure, the informal economy, the political economy of policymaking, volatility, and the Preface globalization of financial flows are also discussed. So-called natural capital and climate change are introduced and linked to growth. The volume ends with a chapter that summarizes our knowledge of growth theory, reviews the process of growth in 13 successful countries, and draws out implications for other developing countries. We hope that this chapter may be of help to policymakers in identifying the constraints to economic growth and development that may be unique to each country. Throughout, attempts have been made to bring together theoretical discussions with empirical evidence to give readers a clearer picture of the impact of economic policies on growth and poverty reduction.

For more information, please read the full paper at Understanding Growth and Poverty: Theory, Policy, and Empirics