inequality is stable over time, or changes too slowly to make a
significant difference in poverty reduction (Deininger and Squire,
1998; and, Bruno et al., 1996). Recent country and regional studies
have looked beyond the 'average' and refuted the initial cross-country
evidence. Large distributional changes can occur even over relatively
short periods of time - for example, in sub-Saharan African; in Latin
America where income distribution improved during the expansion
in the 1970s and deteriorated during the recession of the 1980s; in
China; and, in the transition economies of Eastern Europe and
Central Asia over the 1990s. While the rapid increase in inequality
in the latter region is a special case, it very much confirms the
importance of distribution changes for poverty reduction. Gini
coefficients for the majority of these countries increased by between
5 and 20 percentage points, in some by even more than that, greatly
exacerbating the effects of negative growth on poverty (Kanbur and
Lustig, 1999).
Past changes in distribution have clearly been large enough to
make a substantial difference to the speed of poverty reduction (White
and Anderson, 2001). Policies and growth patterns that improve
distribution are, therefore, a potentially significant additional tool in
the fight against poverty. Past changes in distribution occurred
without active policy intervention, as the focus of development policy
and research was on growth, rather than distribution issues. If, in
future, development policy makes inequality an explicit target, it
will greatly enhance the poverty reducing effect of growth (see section
2.2.). Of course the big question is how best to improve the
distribution of income (see Inequality Briefing No 3)?
inequality is stable over time, or changes too slowly to make asignificant difference in poverty reduction (Deininger and Squire,1998; and, Bruno et al., 1996). Recent country and regional studieshave looked beyond the 'average' and refuted the initial cross-countryevidence. Large distributional changes can occur even over relativelyshort periods of time - for example, in sub-Saharan African; in LatinAmerica where income distribution improved during the expansionin the 1970s and deteriorated during the recession of the 1980s; inChina; and, in the transition economies of Eastern Europe andCentral Asia over the 1990s. While the rapid increase in inequalityin the latter region is a special case, it very much confirms theimportance of distribution changes for poverty reduction. Ginicoefficients for the majority of these countries increased by between5 and 20 percentage points, in some by even more than that, greatlyexacerbating the effects of negative growth on poverty (Kanbur andLustig, 1999).Past changes in distribution have clearly been large enough tomake a substantial difference to the speed of poverty reduction (Whiteand Anderson, 2001). Policies and growth patterns that improvedistribution are, therefore, a potentially significant additional tool inthe fight against poverty. Past changes in distribution occurredwithout active policy intervention, as the focus of development policyand research was on growth, rather than distribution issues. If, in
future, development policy makes inequality an explicit target, it
will greatly enhance the poverty reducing effect of growth (see section
2.2.). Of course the big question is how best to improve the
distribution of income (see Inequality Briefing No 3)?
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