Globalization, growth, and poverty: the missing link

Abstract

PurposeTo review the literature on the relationship between growth, globalization, and poverty, and present empirical evidence on whether countries registering high growth rates do necessarily succeed in reducing the incidence of poverty.Design/methodology/approachNotwithstanding data and methodological problems cited in the literature, this paper makes an effort to quantitatively examine the issue of statistical correlation between growth and poverty variables, through regressing the share of population in poverty on growth rates of countries for which data is available from World Bank surveys.FindingsThe paper concludes that countries registering high growth rates do not necessarily succeed in reducing poverty, thereby, holding that a wide‐ranging policy approach could be more effective in poverty reduction than the broad‐based growth policy approach.Originality/valueThe debate among academics and practitioners over the causal relationship between growth and poverty has not rendered any conclusive evidence that growth is a sufficient condition for reducing poverty, hence the difficulty facing policy makers on the most effective approach for poverty reduction. This paper is an attempt to contribute to this debate and assessing whether to embrace the broad‐based growth or pro‐poor growth policies.