The literature on growth and poverty is voluminous and still
evolving. This title distills the most important lessons from
developing countries’ experience with growth and poverty. It
provides a broad understanding of the impact of economic policies on
growth and poverty reduction in developing countries. After describing
basic economic relationships that summarize the workings and the
measurement of the macroeconomy—and after confirming that growth
is the most critical factor in alleviating poverty—the book turns
to individual policy areas. These include the various roles of
government, among them setting fiscal policy and maintaining an
environment conducive to the effective operation of a market economy.
Policies governing money supply, exchange rates, and the financial
sector are also covered.
After assessing several decades of experience with development
assistance, the aim of which has been to place poor countries on a path
of sustainable long-run growth, the study turns to a discussion of
external debt. In the 1980s and 1990s, debt contracted by low-income
countries from commercial and official sources became unsustainable,
crippling their growth, keeping millions in poverty, and forcing an
international reappraisal of lending policies, the centerpiece of which
was a set of debt-forgiveness policies that was put forward with the
launch of the Jubilee 2000 debt relief campaign.
The remainder of the volume examines problems that can keep the poor
from moving out of poverty. Trade, institutional development,
regulation, education, health, labor markets, land and agriculture,
natural resources, urbanization, technology, and politics—all are
core components of public policy and need to be handled right if
poverty is to be addressed effectively. Because many developing
countries lack the capacity to mobilize resources—administrative
and financial—to move the poor out of poverty, the international
community must be actively involved.
Looking ahead, rates of growth and poverty will be determined by how
nations use knowledge, technology, and energy in firms and households,
and by the effects of the warming climate on economic activities. Above
all, the distribution of political and economic power within and among
countries will determine the direction and dynamics of growth and
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