An Assessment of Pro-Poor Growth in Pakistan from 1993 to 2008

Ahmed Raza Cheema, Maqbool H.

Abstract

The study estimates the three pro-poor growth indices, namely, Poverty Bias of Growth (PBG), Propoor Growth Index (PPGI) and Poverty Equivalent Growth Rate (PEGR) using eight household income and expenditure surveys between 1993 and 2008 conducted by Federal Bureau of Statistics, Government of Pakistan, to ascertain whether growth has been pro-poor or not. The results show that during some periods the growth was not pro-poor meaning that the poor got proportionally fewer benefits than the non poor. The reason was that the deteriorated inequality effect either offset to some extent or in extreme case dominated the favourable growth effects resulting in poverty enhancement. The situation in the latter case is regarded as immiserising growth by Bhagwati. But during some periods the growth was pro-poor meaning that the poor got proportionally more benefits than the non poor. The reason was that the improved inequality effect reinforced the favourable growth effect resulting in greater poverty reduction than that if inequality had remained constant. At a policy level in order to meet the objective of poverty reduction, instead of increasing the growth rate only, the poverty equivalent growth rate should be maximized( i.e., on the one front growth rate be accelerated and on the other front, income distribution concurrently be improved).