Globalization, growth, and poverty: the missing link Ibrahim F. Akoum Arab Monetary Fund, Abu Dhabi, United Arab Emirates Abstract Purpose – To review the literature on the relationship between growth, globalization, and poverty, and present empirical evidence on whether countries registering high growth rates do necessarily succeed in reducing the incidence of poverty. Design/methodology/approach – Notwithstanding data and methodological problems cited in the literature, this paper makes an effort to quantitatively examine the issue of statistical correlation between growth and poverty variables, through regressing the share of population in poverty on growth rates of countries for which data is available from World Bank surveys. Findings – The paper concludes that countries registering high growth rates do not necessarily succeed in reducing poverty, thereby, holding that a wide-ranging policy approach could be more effective in poverty reduction than the broad-based growth policy approach. Originality/value – The debate among academics and practitioners over the causal relationship between growth and poverty has not rendered any conclusive evidence that growth is a sufficient cond ition for redu cing poverty, henc e the difficult y facin g polic y make rs on the most effectiv e approach for poverty reduction. This paper is an attempt to contribute to this debate and assessing whether to embrace the broad-based growth or pro-poor growth policies. Keywords Poverty, Globalization, Economic growth Paper type Research paper Introduction Poverty amid plenty is the world’s greatest challenge (James D. Wolfensohn, Former World Bank President). Eradicating poverty is an ethical, social, political and economic imperative of humankind (UN General Assembly, 1996). Many first-rate globalizers have fifth-rate records on poverty reduction (Watkins, 2002). Growth and poverty reduction are supposedly the ultimate goals of all development endeavors. International development, financial, and trade organizations, as well as pra ctitioners and aca demics in thi s field att est to thi s ass ert ion. For exa mpl e, the Wor ld Bank holds that its mission is to fight poverty and put it at the center of all the work it undertakes (World Bank, 2001, p. v). On its part, the World Trade Organization (WTO, 2005) contends that its goal is to improve the welfare of the peoples of the member countri es, thr ough pro mot ing trade lib era liz ation, the res ult of whi ch is a more prosperous, peaceful, and accountable economic world. Even the International Monetary Fund (IMF), which is supposedly a monetary rather than a devel opment instituti on, has comme nced actively working toward pover ty reduction in the past few years, through the provision of financial support via its concessional lending facility, the Poverty Reduction and Growth Facility (PRGF), and debt relief under the Heavil y Indebted Poor Countries (HIPC) Initiative. In most low-income countries, IMF’s support is underpinned by Poverty Reduction The current issue and full text archive of this journal is available at www.emeraldinsight.com/0306-8293.htm IJSE 35,4 226 International Journal of Social Economics Vol. 35 No. 4, 2008 pp. 226-238 q Emerald Group Publishing Limited 0306-8293 DOI 10.1108/03068290810854529
