Economic Growth, Income Inequality, and Poverty Reduction: Evidence from Sub Saharan Africa Countries

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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.



Economic Growth, Income inequality