International Journal of Applied Research
Vol. 3, Issue 7, Part J (2017)
Impact of growth and inequality on poverty in Ethiopia: Empirical evidence from Amhara region
Kibrom Kahsu Hailu And Dr. G Nagaraja
Poverty reduction is the fundamental goal of Ethiopia and is to be achieved through sustained and broad based economic growth and income distribution. Therefore, the relationship between economic growth, income distribution and poverty reduction and its change law should be a main concern of policy. At present, a large number of theoretical and empirical studies have shown that economic growth can reduce poverty, but its capacity for poverty reduction is affected by the situation of income distribution. If the income gap widens along with the economic growth, the poor will benefit less from the growth compared to the non-poor. As a result, the poverty reduction effects of economic growth will be partially or completely offset by the increased inequality in income distribution (Datt and Ravallion, 1992; Kakwani, 2000). This study examines the impact of growth and inequality on poverty in Amhara regional of Ethiopia. The study decomposed changes in poverty into growth and redistribution effect by employing the Datt and Ravallion (1992) approach and using panel data from four round household income, consumption and expenditure (HICE) surveys conducted in the region between the period 1995/96 to 2010/11 by the central statistics authority (CSA) of Ethiopia. Result from this study indicated that the substantial decline in poverty incidence in Amhara region for the period between 1995/96 and1999/00 and between 2004/05 and 2010/11 is attributed to the increase in real household per capita expenditure while the reduction in inequality contributed to the reduction in poverty, more than the contribution of rising per capita expenditure, for the period between 1999/00 and 2004/05. Based on the findings of this study, we recommend that appropriate measures need to be taken to reduce the existing inequality to reduce poverty at a higher rate. That is, in order to deal with poverty problems successfully, the issues of income inequality must also be dealt with. Hence, government should implement policies that aim at redistributing income in favour of the poor and middle class households.
How to cite this article:
Kibrom Kahsu Hailu And Dr. G Nagaraja. Impact of growth and inequality on poverty in Ethiopia: Empirical evidence from Amhara region. Int J Appl Res 2017;3(7):678-683.