Spatial Comparisons of Poverty and Inequality in Living Standards in Malawi

The paper looks at poverty and inequality across areas in Malawi. The focus is on both monetary (consumption) and non‐monetary (health and education) dimensions of well‐being. Stochastic poverty dominance tests show that rural areas are poorer in the three dimensions regardless of poverty line chosen. Stochastic inequality dominance tests find that the north and south dominate the centre in health inequality, and there is no dominance between the north and south. With respect to education inequality, dominance is declared for the south‐centre pair only. A subgroup decomposition analysis finds that the south contributes the most to consumption and education poverty, while the centre is the largest contributor to health poverty. We establish that within‐area inequalities (vertical inequalities) rather than between‐area inequalities (horizontal inequalities) are the major driver of consumption, health and education inequality in Malawi.     

The growth,poverty and inequality nexus in South Africa: Cointegration and causality analysis

This study empirically established the long-run relationship and causality effects that exist between growth, poverty and inequality. The analysis was carried out on a panel of nine South African provinces from 1995 to 2012. To capture poverty and inequality in a broader context, two measures of poverty (income and non-income) and three measures of inequality (income, education and land) were adopted for the study. The results confirm that there is a long-run relationship between growth, poverty and inequality. Notable results from the causality tests suggest that growth does not promote equal distribution of income in society but as income distribution begins to equalise, economic growth rises. This is regarded as growth–inequality disconnect. The unidirectional causality, which runs from income poverty to income inequality, suggests that a rising level of income poverty will lead to falling income inequality in the society; likewise, income inequality increases as non-income poverty declines.     

Spatial Patterns of Inequality and Poverty in Indonesia

The paper uses data from the 1976 Household Expenditure Survey (Susenas) to examine spatial patterns of poverty and inequality in Indonesia. A number of inequality measures are computed for each province (Gini Ratio. Atkinson Index, Theil Index, L-Index) and provincial rankings according to each index are compared. Provinces are also ranked according to a number of poverty indexes, using a poverty line adjusted for differences in price levels, between provinces. The correlation between selected measures of poverty and inequality is also investigated and some implications for regional development policy discussed.     

Productivity Assessment of African Seaports

Abstract: This paper analyses the productivity of a representative sample of African seaports in Angola, Mozambique and Nigeria from 2004 to 2010, using a data envelopment analysis (DEA) approach. The paper finds that Nigerian seaports are the most efficient, followed by those in Mozambique and Angola. A discussion of the results is provided, in addition to the related policy implications.     

Investigating Growing Inequality in Mozambique

In this paper, we investigate the long‐term trend of consumption inequality in Mozambique. We show that an imbalanced growth path disproportionally benefited the better‐off and caused increasing inequality, especially in more recent years, curbing the necessary reduction in poverty. Using a regression decomposition technique, our results suggest that this trend was strongly associated with the higher attained education of household heads and with the changes in the structure of the economy (with less workers in the public and subsistence sectors). The trend was, however, mitigated by the tendency for the higher level of attained education and the smaller public sector to become associated with less inequality over time. These results point to the importance of accelerating the expansion of education and improving the productivity of the large subsistence sector to lower inequality in line with the sustainable development goals.     

Economic growth,inequality, and poverty in Vietnam

This study examines how poverty reduction has been associated with economic growth and inequality in Vietnam. It finds that although the speed of poverty reduction was lower in the 2000s than in the 1990s, economic growth was more pro‐poor in the latter period. During the 1993–98 period, expenditure inequality increased and the poverty reduction during this period was mainly caused by economic growth. During the 2004–08 period, however, expenditure inequality decreased, thereby contributing to poverty reduction. The poverty incidence declined by around 5 percentage points, of which expenditure growth and redistribution contributed 2.8 and 2.2 percentage points of poverty reduction, respectively.     

The impact of banking services on poverty: Evidence from sub-district level for Bangladesh

The extent to which banking services can reduce poverty is under question as recent experimental evidence has suggested that there is no impact. Our findings, based on survey and administrative data, are to the contrary. We compile a unique dataset of banking measures and poverty indicators at the level of Bangladesh’s 544 administrative sub-districts. We find a relationship between banking services and poverty reduction, and show that the relationship works through the deposit channel rather than the credit channel. We exploit variation in branch placement by sub-district between 2010 and 2015 to implement a difference-in-difference estimation approach. We also estimate ordinary least squares and fixed effects models to explore the role of factors other than banking services in poverty incidence. Broad findings supporting a role for the deposit channel, but not the credit channel, are confirmed. These results have significant policy implications as governments in developing countries are actively involved in promoting financial inclusion through the banking sector.     

Introduction to Special Issue on: ‘Inequalities in the Least Developed Countries – Some Lessons from Africa’

This special issue comprises six papers analysing different dimensions of inequalities in African countries. Three papers deal with the trend in inequality in consumption in Mozambique, with multidimensional poverty in four sub‐Saharan countries, and with the relationship between living conditions and subjective well‐being in African countries. The other three are focused on gender issues and are focused on Mozambique, dealing with gender inequalities in the access to contract farming arrangements as well as to employment out of subsistence agriculture, or with the effect of women’s empowerment on children’s health. This introduction provides a short overview of how they contribute to a better understanding of inequalities in low‐income countries.     

Food Price Crisis,Poverty, and Inequality

This paper simulates how a doubling of food prices affects absolute poverty and the food‐price‐adjusted real income distribution. We assume unsubsidized world food prices in order to derive the cost of poverty deepening and poverty expansion. We also estimate the degree to which inequality increases if no measures are put in place to offset rising food prices. Both measures are vulnerability indicators useful for social policy planning. Our results show that low‐income countries experience dramatic increases in absolute poverty as a result of doubling food prices. Middle‐income countries experience the greatest decrease in absolute income, which contributes most to an increase in world income inequality. The paper estimates that the global dollar value of the absolute poverty gap ($1.25/day) has the potential to increase by 400%, with poverty deepening accounting for two thirds of the increase.     

Non-monetary dimensions of well-being in South Africa, 1993–2004: A post-apartheid dividend?

Existing studies on shifts in income welfare in South Africa since the demise of apartheid suggest that income inequality increased, while headcount poverty rates declined since 2000, after some evidence of an increase or no change in poverty in the 1995–2000 and 1996–2001 periods. This study provides an analysis of the shifts in non-income welfare that have occurred in South Africa between 1993 and 2004. We use factor analysis to construct an asset index as a measure of non-income-based welfare. Variables reflecting household access to a range of services and assets are used in the construction of the index. Significantly different results emerge when non-income welfare shifts are considered: we show statistically significant decreases in the headcount asset poverty rates between 1993 and 2004 across a range of covariates. Finally, asset inequality decreased significantly between 1993 and 2004 – in stark contrast to results based on consumption data.     

Smoke and mirrors? The science of poverty measurement and its application

Measures of poverty are much used, but also much criticised as having limited value in debates on public resource allocation. Some argue that the measures are too conservative and do little more than complicate important issues of inequality and injustice. However, poverty measurement can be sensitive to these concerns if grounded in the field's well-developed theoretical foundation. In South Africa, poverty measures over more than 50 years have consistently taken into account distributional issues and the causes and implications of deprivation, and most South African analyses of poverty have recognised and incorporated the multi-dimensional nature of poverty. Recognising different perceptions of aggregation, time horizon and the role of states and markets is perhaps more important than methodology when assessing what poverty measures can contribute. With proper theorisation, and attention paid to the purpose of poverty diagnostics, measurement is more than sleight-of-hand and can provide both a tool for advocacy and a means to implement policies that promote greater social justice.     

Revisiting the Impact of Consumption Growth and Inequality on Poverty in Indonesia during Decentralisation

This article analyses the consumption growth elasticity and inequality elasticity of poverty in Indonesia, with a particular focus on the decentralisation period. Using provincial panel data, we show that the effectiveness of growth in alleviating poverty across provinces was greater during decentralisation—that is, between 2002 and 2010—than at any other point since 1984. The growth elasticity of poverty since 2002 is estimated to have been –2.46, which means that a 10% increase in average consumption per capita would have reduced the poverty rate by almost 25%. However, we also find that rising income inequality negated a quarter to a third of the 5.7-percentage-point reduction in the headcount poverty rate. This increasing inequality has contributed to a lower level of pro-poor growth than that maintained in Indonesia before decentralisation.     

Unemployment in Africa: A Fractional Integration Approach

This paper estimates long‐memory models to analyse the stochastic behaviour of unemployment in eleven African countries (Botswana, Ethiopia, Ghana, Kenya, Malawi, Mauritius, Nigeria, Senegal, South Africa, Tanzania and Zambia) from the 1960s until 2010. The empirical results provide very strong evidence of lack of mean reversion in all series under examination. This suggests that hysteresis models are the most relevant for the African experience (not surprisingly, given the rigidities in their labour markets). Therefore in such countries shocks hitting the unemployment series will have permanent effects, and policy makers should take appropriate action to reverse the effects of negative shocks.     

Defining Poverty Lines As a Fraction of Central Tendency

We show under lognormality that when the Gini coefficient is stable over time, defining the poverty line as a fraction of a central tendency of the living standard distribution restricts the evolution of the poverty measures to stability. That is. poverty does not change if the Gini coefficient does not change. Moreover, when the Gini coefficient slightly changes, most of the poverty change can be considered a change in inequality. The consequences of using different poverty lines are then analyzed. Thus, important features in studies of poverty change based on these lines may result from methodological choices, rather than from economic mechanisms.     

CAN VIETNAM ACHIEVE THE MILLENNIUM DEVELOPMENT GOAL ON POVERTY REDUCTION IN HIGH INFLATION AND ECONOMIC STAGNATION?

An important aspect of the Millennium Development Goals (MDGs) to which Vietnam is committed is to reduce overall and food poverty. Although Vietnam has achieved remarkable reductions in poverty during recent years, Vietnam may not achieve its MDGs on poverty reduction because of high inflation and economic stagnation. This paper uses three recent Vietnam Household Living Standard Surveys (VHLSSs), in 2002, 2004, and 2006, to forecast poverty in 2008 and 2010 to examine whether Vietnam can achieve its MDGs on poverty reduction. The forecast takes into account high inflation in 2008 and economic stagnation during 2008–09. It is found that Vietnam may be able to achieve its MDGs on reduction of overall poverty; however, the MDGs on food poverty reduction may not be achieved.     

Do International Remittances Affect Poverty in Africa?*

Abstract: International remittances flowing into developing countries are attracting increasing attention because of their rising volume and their impact on recipient countries. This paper uses a panel data set on poverty and international remittances for African countries to examine the impact of international remittances on poverty reduction in 33 African countries over the period 1990–2005. We find that international remittances—defined as the share of remittances in country GDP—reduce the level, depth, and severity of poverty in Africa. But the size of the poverty reduction depends on how poverty is being measured. After instrumenting for the possible endogeneity of international remittances, we find that a 10 percent increase in official international remittances as a share of GDP leads to a 2.9 percent decline in the poverty headcount or the share of people living in poverty. Also, the more sensitive poverty measures—the poverty gap (poverty depth) and squared poverty gap (poverty severity)—suggest that international remittances will have a similar impact on poverty reduction. The point estimates for the poverty gap and squared poverty gap suggest that a 10 percent increase in the share of international remittances will lead to a 2.9 percent and 2.8 percent decline, respectively, in the depth and severity of poverty in African countries. Regardless of the measure of poverty used as the dependent variable, income inequality (Gini index) has a positive and significant coefficient, indicating that greater inequality is associated with higher poverty in African countries, much in conformity with the literature. Similar results were obtained for trade openness. In the same vein, per capita income has a negative and significant effect on each measure of poverty used in the study. Our results also show that inflation rates positively and significantly affect poverty incidence, depth and severity in Africa. In all three poverty measures, the dummy variable for sub‐Saharan Africa is strongly positive, and strongly negative for North Africa. The policy implications of these results are discussed.     

Socialist development in an underdeveloped country: The case of Tanzania

The author attempts to draw on the experience of Tanzania in order to provide some comments on socialist investment strategies. Tanzania has been more successful in reorienting its programme of social investment than its investment programme for economic development. This failure stems from real differences within Tanzania, and among socialists generally, about appropriate socialist investment strategies for a country at Tanzania's stage of development. It also reflects the fact that socialism in Tanzania is a change imposed from the top, and the bureaucracy remains relatively immune from the pressures of the people and the poverty in which they live.     

Poverty and Inequality Maps in Rural Vietnam: An Application of Small Area Estimation

The objective of the present paper is to estimate poverty and inequality for rural Vietnam at different levels of aggregation by combining the Vietnam Household Living Standard Survey from 2006 and the Rural Agriculture and Fishery Census from the same year. Using the small area estimation method, estimates at the regional, provincial and district level are produced, and both expenditure and income based measures are considered. It is found that all provinces across the country have experienced a noticeable reduction in rural poverty during the period 1999–2006. Some of the largest reductions in poverty are observed for provinces with poverty rates close to the national average. The poorest provinces are experiencing reductions in poverty, albeit at a more modest pace. Provinces and districts with a larger poverty reduction in the period 1999–2006 tended to have a lower level of inequality in 2006. Results based on expenditure poverty estimates are found to be very similar to those based on income poverty estimates.     

Measuring poverty with noisy and corrected estimates of annual consumption: Evidence from Nigeria

An opportunity to improve measurement and modelling of poverty in Africa arises from recent intra‐year panel surveys that observe household consumption in post‐planting and post‐harvest periods. Observing the same household twice lets an intra‐year correlation be estimated, which can be used to form a corrected estimate of annual consumption. The usual approach surveys consumption for just one short period, like a week or month, and extrapolates to an annual total. This may adequately estimate mean annual consumption for samples spread over a year but overstates dispersion. The resulting noise in consumption estimates inflates measures of poverty and inequality and creates misclassification errors that bias logit and probit models of poverty determinants. This study uses data from the 2012/2013 Nigeria General Household Survey panel to show effects on poverty measures of using annual estimates extrapolated from short‐period surveys. With the corrected extrapolation method that uses intra‐year correlations to adjust for inflated variances, Nigeria's poverty headcount rate falls by one half. Hence, much of the poverty measured in cross‐sectional surveys is transient poverty, for which different policy interventions are needed than for alleviating chronic poverty.