Poverty Reduction and Economic Growth: The Asian Experience

Abstract

The Asian experience of poverty reduction has varied widely. Over recent decades the economies of East and Southeast Asia have achieved large reductions in absolute poverty incidence, but in South Asia the achievement has generally been less impressive. This paper examines the relationship between these outcomes and the rate of economic growth, both in aggregate and in the agricultural, industrial, and services sectors. It uses available data on the headcount measure of poverty incidence in India; Indonesia; Malaysia; Philippines; Thailand; and Taipei, China over the period from the 1960s to the 1990s, in aggregate and in both rural and urban areas. It then uses this data set to analyze the economic determinants of changes in poverty incidence and attempts to explain the differences in the country outcomes that are obtained. The evidence supports the view that the overall rate of economic growth is much more important than its sectoral composition.