Economic Growth and Poverty By: Shahid Umar Zainab Taj Arousa Ishtiaq

Economic Growth Increase in a country's productive capacity, as measured by comparing gross national product (GDP) in a year with the GDP of the previous year. Inclusive Growth Exclusive Growth http://www.economicsonline.co.uk/Managing_the_economy

Inclusive Growth Growth is inclusive when it creates economic opportunities and trickled down the benefits of growth to all segments of the society and ensure equality OR Inclusive growth is a concept that advances equitable opportunities for economic participants during economic growth with benefits incurred by every section of society http://www.economicsonline.co.uk/Managing_the_economy

Rapid and sustained poverty reduction requires inclusive growth that allows people to contribute to and benefit from economic growth Sustainable poverty reduction Broad-Based across sectors Trickle-down

The inclusive growth approach takes a longer term perspective as the focus is on productive employment rather than on direct income redistribution, as a means of increasing incomes for excluded groups. Impact in the Short run Impact in the Long run

Inclusive growth simply means the growth or progress of a country such that each and every citizen benefits from the growth. Exclusive growth on the other hand leaves a sizeable lot of population deprived of the fruits of growth

Sustainable Economic Growth Sustainable economic growth is economic development that attempts to satisfy the needs of current population in a manner that sustains natural resources and without compromising the needs of the future generations. http://www.economicsonline.co.uk/Managing_the_economy

Why is stable growth an economic objective? If growth rises significantly above or below the trend rate, the economy is experiencing excessive growth or low growth. If the rate becomes negative for at least 2 quarters in succession, the economy is in recession. http://www.economicsonline.co.uk/Managing_the_economy

The trade (growth) cycle Changes in real national income tend to be cyclical, but it is desirable that this cycle is stable rather than unstable. In other words We mean Business cycles should have some gradual upward trend rather than ‘boom’ and ‘bust’. Short interval of boom is of no help to reduce poverty. Since its inception, Pakistan never witnessed economic stability due to political instability. And we know that political stability is inevitable for economic stability and prosperity. http://www.economicsonline.co.uk/Managing_the_economy

Sustained Growth Matters

If Growth is Sustainable and Promote Prosperity It will Reduce: Poverty, Inequality, and Unemployment (Department of International Development: Growth:Builiding jobs and prosperity in developing Countries)

Sustainable Growth Helps People move out of poverty Research that compares the experiences of a wide range of developing countries finds consistently strong evidence that sustained growth is the most important way to reduce poverty. Sustainable Growth stimulate economic activities and generate employment opportunities that increases the level of income and ultimately reduces poverty. A typical estimate from these cross-country studies is that 10 percent increase in a country’s average income will reduce the poverty rate by between 20 and 30 percent. (Department of International Development: Growth:Builiding jobs and prosperity in developing Countries)

Advantages and Disadvantages of Economics Growth Higher GDP per capita More employment More public and merit goods http://www.economicsonline.co.uk/Managing_the_economy

Disadvantages Widening income gap Growth can also widen the distribution of income, because some groups may benefit much more than others. Certainly in the UK, the relative income gap has widened during the growth years of 1992 to 2008. Causes Inflation Too rapid a rate of growth can also lead to inflationary pressure. Negative externalities As production and consumption increase, negative externalities, such as pollution and congestion, are likely to arise. http://www.economicsonline.co.uk/Managing_the_economy

Impact of Economic growth on Poverty Economic growth is important for higher the income of poor people and also their living standards. Mostly the higher levels of per capita GDP will mean that the typical person has a better diet, improve health and access to medical services, longer life expectancy and greater educational opportunity (Department of International Development: Growth:Builiding jobs and prosperity in developing Countries)

The relationship is not direct. In some cases it can be positive i. e The relationship is not direct. In some cases it can be positive i.e. economic growth leading to reduction in poverty in some cases it can be negative, i.e. economic growth leading to increase in poverty. The impact of economic growth on poverty depends highly on the inequalities that are prevailing in an economy.

Poverty reduction is ultimately dependent on economic growth. In the long-term governments cannot borrow and spend to fund anti-poverty programs without the economic wealth being created to pay for them.

Bottom line Growth reduces poverty if it promotes the shared prosperity while reducing unemployment and inequality in the economy.