We begin the chapter by defining inequality and poverty, terms that are commonly used in informal conversation but need to be measured more precisely to provide a meaningful understanding of how much progress has already been made, how much remains to be achieved, and how to set incentives for government officials to focus on the most pressing needs. You will see that the most important measures of poverty and inequality used by development economists satisfy properties that most observers would agree are of fundamental importance. After a discussion of why attention to inequality as
well as poverty is important, we then use the appropriate measures of poverty and inequality to evaluate the welfare significance of alternative patterns (or“typologies”) of growth. After reviewing the evidence on the extent of poverty
and inequality in the developing world, we conclude with an overview of the key issues in poverty policy. Some important principles of effective poverty policies are considered, together with some initial examples of programs that
have worked well in practice. We conclude the chapter with a comparative case study of Ghana and Côte d’Ivoire, which illustrate issues of the quality of growth and the difficulties of achieving it.