David Dollar talks with
ScienceWatch.com and answers a few questions about
this month's Fast Moving Front in the field of Economics
Article: Growth is good for the poor
Journal: J ECON GROWTH, 7 (3): 195-225 SEP 2002
Addresses: World Bank, Dev Res Grp, 1818 H St NW,
Washington, DC 20433 USA.
World Bank, Dev Res Grp, Washington, DC 20433 USA.
Why do you think your paper is highly
I think the paper is widely cited because it addresses an important
contemporary issue, what's happening to inequality all over the world and
is there anything we can do about it? The paper draws on a large number of
household data sets and hence its results are quite robust.
Does it describe a new discovery, methodology, or
synthesis of knowledge?
The paper extends an earlier literature on the effect of growth on poverty
reduction and on the determinants of inequality. I think its main
contribution is that it took a new methodological approach that is
intuitively appealing and brought the maximum amount of data to bear on the
Would you summarize the significance of your paper
in layman’s terms?
"The solid growth of the
world economy in the past 25 years has led to
unprecedented poverty reduction..."
As a general proposition, income of the poor rises proportionally to
overall country income, so that sustained economic growth will typically
lead to poverty reduction. Of course there is variation around this general
relationship, based on changes in income distribution. So, the paper also
tries to explain changes in income distribution. We find that there are
very few robust generalizations about changes in income distribution. That
finding, while on the surface a negative one, debunks many common myths.
For example, it is not true those countries that engage more in
international trade or have more open trade policies experience rising
inequality. In some cases, yes, in other cases, no.
Since there is quite a bit of evidence that globalization accelerates
growth of developing countries, our contribution enables us to go one step
further and conclude that in general globalization is reducing poverty in
the developing world.
How did you become involved in this research, and
were there any particular problems encountered along the way?
We were stimulated to undertake this research because in the late 1990s it
was common for pundits to claim that growing international trade and
investment were leading to higher inequality in countries and to growing
poverty. We were not aware of any evidence to support this, so we decided
to collect as much data as possible to examine these ideas with an open
mind. I remember saying to my co-author, Aart Kraay, that whatever we find
will be relevant and interesting.
Where do you see your research leading in the
The fact that it is hard to find general patterns in distributional changes
does not mean that country policies are irrelevant. I myself am based in
China now and have been interested to look more specifically within China
at what factors are leading to changes in income distribution and
reductions in poverty. I think that the kind of cross-country analysis that
Aart and I did is usefully complemented by country case studies.
Do you foresee any social or political implications
for your research?
Our paper has clear policy implications: it is very much in the world's
interest to maintain and extend an open trading system and other
fundamental institutions and policies that promote economic growth. The
solid growth of the world economy in the past 25 years has led to
unprecedented poverty reduction, roughly cutting the global poverty rate in
half. That said, it is also smart for individual countries to look at how
their overall policy stance is affecting the distribution of income and to
be aware that because of technological change and shocks in the world
economy—such as recent food and energy price hikes—there will
always be relative winners and relative losers within countries. Smart
policy recognizes these risks and tries to help people with intelligently
designed safety nets.
David Dollar, Ph.D.
Country Director for China and Mongolia
East Asia and Pacific Region
The World Bank Group
Keywords: growth, overall country income, sustained economic growth,
poverty reduction, inequality, income distribution, international trade,
globalization, global poverty rate.