Poverty Reduction and Economic Growth In Southeast Asia

Abstract

Since the 1970s, the majority of Southeast Asian countries have achieved both rapid economic growth per person and large reductions in the incidence of poverty. This study focuses on the relationship between these two phenomena within the Southeast Asian economies, controlling for both the relative price of food and the sectoral composition of the growth. Among other issues the paper explores whether the relative price of food and the sectoral composition of economic growth - including agriculture, industry and services - are relevant in terms of the rate of poverty reduction, given the overall rate of economic growth. The results confirm both the relevance of relative prices and the fact that poverty reduction is strongly related to the growth of real GDP per person. The sectoral composition of the growth is also important, especially in so far as it affects the expansion of the agricultural sector relative to the rest of the economy. The results confirm that growth based on the expansion of this sector contributes more strongly to poverty than growth arising from industry or services.