Working Paper BETA #2008-17

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Title : Pro-poor growth and pro-poor convergence across countries

Author(s) : Jalal El ouardighi

Abstract : In this paper, we examine the link between the concepts of income convergence and pro-poor growth in a panel of countries. We show that if growth is pro-poor, then the convergence which occurs is a ‘pro-poor convergence’, because it necessarily implies a fall in income inequality. The empirical analysis uses the data on GDP per capita of 15 European countries for the period 1950-2005. Although the long-run shows pro-poor growth and convergence, the results stress that there are differences in such patterns across periods. Thus, the sub-period 1950-1973 exhibits an unambiguously pro-poor growth and convergence process in the European Union. In contrast, the 1974-2005 sub-period points out two phenomena: neither convergence nor divergence (1974-1992), and a neutral process of growth, i.e., income and inequality converge at the same speed (1993-2005). In the light of these findings, one can question the positive effects of European integration and the effectiveness of the economic and social cohesion policies.

Key-words : Pro-poor Growth; Pro-poor Convergence ; Income Inequality ; European Countries.

JEL Classification : C23, O47, O52