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Pathways to sustained poverty reduction: balancing growth from above and below

Briefing/policy papers

Written by Andrew Shepherd, Vidya Diwakar

This briefing note summarises the findings of the Chronic Poverty Advisory Network's (CPAN) forthcoming Chronic Poverty Report on Growth (Shepherd et al., 2019).

Studying the movement of households into and out of extreme poverty in 11 countries in sub-Saharan Africa and South and Southeast Asia reveals important nuances to the mainstream growth and poverty reduction narrative.

Key messages

  • Most people escape extreme poverty through ‘growth from below’ (GfB) – that is, through small investments by households in micro-enterprises, smallholder agriculture, the rural non-farm economy, and through the urban informal sector.
  • Fewer people escape through ‘growth from above’ (GfA) – which results from larger, more formal investments, for example in labour-intensive manufacturing. Those who do accomplish this through GfA work mainly in industries such as garment manufacturing, where employment is accessible to poor, often migrant women and men.
  • Governments and their development partners largely support GfA, though there are some governments and donors that do much better in supporting GfB.
  • Social and economic policy measures to tighten labour markets assist both GfA and GfB to reduce poverty, but more strategic efforts and attention are needed to balance GfA and GfB to facilitate sustained escapes from poverty.

Andrew Shepherd and Vidya Diwakar