This publication explores the complex relationship between growth and poverty, which lie at the heart of development economics, and considers the policy implications. It contains a selection of papers presented at a conference, organised by the UNU World Institute for Development Economics Research and held in May 2001, which sought to review current thinking on the topic, and promote the debate and exchange of ideas on future policy directions. These papers deals with institutional and policy questions, as well as sectoral issues and individual country experiences.

The relationship between growth and poverty lies at the heart of development economics. Many see growth of the macroeconomy as both necessary and sufficient for reduction in the incidence and severity of poverty, and consequently focus their efforts on achieving the desired macroeconomic outcomes. Others stress the fact that the benefits from growth may not be evenly spread. In fact, as the critics of globalization often point out, growth at the aggregate level may well have an adverse effect on many of the most vulnerable members of society. Thus the distributional impact of growth, as well as its level, needs to be taken into account when considering the consequences for poverty.

Controversy is not new to this issue. Since the 1950s, the possible adverse distributional effects of growth have been well recognized, often in connection with Kuznets' famous “inverted-U hypothesis”, which claims that inequality rises during the initial phases of development, then declines after some crucial level is reached. This prompted efforts in the 1970s to identify pro-poor growth policies that achieve redistribution while at the same time stimulating growth. But the shift in emphasis was reversed a decade later when experience in East Asia and elsewhere again focused attention on the extent to which high growth rates succeed in reducing poverty.

Almost inevitably, the 1990s saw another round of reappraisals and . . .