The Interrelationship Linking Growth, Inequality and Poverty in Sub-Saharan Africa

The combination of initial endemic poverty, high inequality and low growth has been a major obstacle to the achievement of poverty reduction and, more generally, overall socio-economic development in much of the African sub-continent. The rich contributions to a better understanding of pro-poor growth need to be complemented by a similar effort to understand better the mechanisms through which poverty impacts growth and how to design a pro-growth poverty-reduction strategy. The objectives of this paper are to review and attempt to synthesise the relevant literature on, first, the growthinequalitypoverty nexus and, second, the reverse causality linking reduced poverty to more inclusive growth within the context of Sub-Saharan Africa (SSA). The analysis of the interrelationship among growth, inequality and poverty can be undertaken at different levels of aggregation. In this paper, this interrelationship is scrutinised under three different lenses: a global one, a macro (national) one and a micro one. Under each one of these lenses, an attempt is made to identify the main mechanisms through which growth affects poverty, while emphasising the relatively novel reverse causality and the various mechanisms through which poverty reduction can encourage present and future growth. A successful national development strategy needs to be context-specific and tailored to the initial conditions of each country. The final section of the paper derives a typology distinguishing Sub-Saharan economies according to their initial conditions such as quality of governance and institutions, resource endowment, level of development, potential for agricultural growth and geographical location. Six categories of SSA countries are identified and the most relevant development policies in each instance are suggested.