Economic Growth, Income Inequality, and Poverty Reduction: Evidence from Sub Saharan Africa Countries
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Date
2020-06
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A.A.U
Abstract
In recent times there has been a renewed interest in relationships between economic growth, in-
equality, and poverty. In this paper, we use System GMM estimation of dynamic panel data on
the twenty-seven SSA countries to consider whether the recent tremendous growth has had an
appreciable impact on Poverty and Inequality. We argue that such economic growth have been
associated with poverty reduction and widen income inequality. Thus, Economic growth in SSA
countries is often aimed at improving the life of the poor, although the e¤ectiveness has often
been hindered by inequality on transferring growth into poverty reduction. Moreover, although
the non-monetary measure and income poverty measures have similar result-shows reducing
poverty, the non-income poverty especially the destitution data suggests that SSA countries
are poorer than we thought. We argued that SSA countries would do promote a policy of
Income-enhancing (i.e. economic growth) and inequality-reducing complementarily to translate
into poverty reduction. In addition, we revealed that the Kuznets hypothesis was invalid. So,
strengthening the egalitarian income distribution system in every stage of development is rec-
ommended rather than after a certain level of development as Kuznets argued. Furthermore,
we nd that Credit has an important contribution to reducing poverty but it increases income
inequality. Our argument here is building a pro-poor credit institution which should concen-
trate on consumption banking to bene t the poor, and to reduce income inequality. As well as
being important to policy debates, this study may help to di¤use the more general pessimism
that can underestimate the e¤ect of economic growth on income redistribution in developing
countries speci cally in SSA countries.
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Keywords
Economic Growth, Income inequality