Are Pro-Growth Policies Pro-Poor?

The basis, and characterization, of pro-poor growth remain a source of debate in the current development literature. The paper sheds light on this debate with an example drawn from an analysis of household panel data from Bangladesh. The objective is to determine if observed rural income growth and the policies supporting this growth have been pro-poor — that is, whether policies and growth have benefited lower income quantiles more than the higher income quantiles. The results suggest that growth in overall income has indeed led to a significant reduction in poverty by concentrating the benefit among households at the poorest end of the distribution. This reduction in poverty stems through policies that have also traditionally been considered to be progrowth, including commercial bank expansion, infrastructural investment, and higher agricultural output prices, since their induced growth is pro-poor. Income growth in different sectors is also shown to differentially impact poverty reduction across households in the distribution — while farm income growth has largely benefited all, non-farm income growth has exclusively benefited the poor.