The drivers of poverty reduction

Does economic growth benefit the poor and does the answer depend on the nature of the growth? These questions are hotly debated throughout the world and the answers are important for policy formulation. One form the debate has taken asks whether the poverty-reducing propensity of economic growth depends on its sectoral composition – whether the growth occurs in the agricultural, industrial or services sectors of the economy. The countries of Southeast Asia illustrate these issues very well. Over recent decades these countries have each experienced wide fluctuations in both growth rates (aggregate and sectoral) and poverty reduction outcomes. In all these countries, whether economic growth does or does not deliver sustained reductions in poverty incidence, and what kinds of growth reduce poverty the most, are questions of ongoing policy debate.