On Tuesday, March 9, 2010 The Center for Global Development and The Paul H. Nitze School of Advanced International Studies co-hosted a Massachusetts Avenue Development Seminar (MADS)* on Why Don’t We See Poverty Convergence? featuring Martin Ravallion, Director, Development Research Group, World Bank. James Foster, Professor of Economics and International Affairs, George Washington University, and Jacques van der Gaag, Senior Fellow, Global Economy and Development, Brookings Institution, served as the discussants.
Abstract: We see signs of convergence in average living standards amongst developing countries and of greater progress against poverty in faster growing economies. Yet we do not see poverty convergence; the poorest countries are not enjoying higher rates of poverty reduction. The paper tries to explain why. Consistently with some growth theories, analysis of a new data set for 100 developing countries reveals an adverse effect on consumption growth of high initial poverty incidence at a given initial mean. Starting with a high incidence of poverty also entails a lower rate of progress against poverty at any given growth rate (and conversely poor countries tend to experience less steep increases in poverty during recessions). Thus, for many poor countries, the growth advantage of starting out with a low mean is lost due to their high poverty rates. The size of the middle class—measured by developing-country, not Western, standards—appears to be an important channel linking current poverty to subsequent growth and poverty reduction. However, high current inequality is only a handicap if it entails a high incidence of poverty relative to mean consumption.
Read Why Don’t We See Poverty Convergence? (pdf, 672K)
Access Martin Ravallion's presentation (pdf, 443K)
*The Massachusetts Avenue Development Seminar (MADS) series is an effort by the Center for Global Development and The Paul H Nitze School of Advanced International Studies to take advantage of the incredible concentration of great international development scholars in the Metro Washington, DC area. The series seeks to bring together members of this community and improve communication between them.