A high pace of growth over extended periods of time is a necessary, and often the main contributing factor in reducing poverty as found by a sizable body of literature including Deininger and Squire (1998), Dollar and Kraay (2002), White and Anderson (2001), Ravallion (2001) and Bourguignon (2003). In a frequently cited cross-country study, Kraay (2004) shows that growth in average incomes explains 70 percent of the variation in poverty reduction (as measured by the headcount ratio) in the short run, and as much as 97 percent in the long run. Most of the remainder of the variation in poverty reduction is accounted for by changes in the distribution, with only a negligible share attributed to differences in the growth elasticity of poverty. Lopez and Servén (2004) suggest that for a given inequality level, the poorer the country is, the more important is the growth component in explaining poverty reduction.