Growth, Employment, and Poverty: An Analysis of the Vital Nexus Based on Some Recent UNDP and ILO/SIDA Studies

This paper explores the relationship between economic growth and poverty reduction with special focus on the role of employment in shaping the linkage. It is based on findings from 16 country case studies carried out by the United Nations Development Programme (UNDP) and the International Labour Organization (ILO).

The principal finding of the paper is that the rate of poverty reduction has invariably been lower than what it potentially should have been, primarily because of the low employment intensity of growth and low overall growth.

The paper states that macroeconomic policies in most of the countries have either hindered growth or have been unhelpful in promoting growth. Study findings include:

• Rapid economic growth and containment of inequality are essential for healthy and sustained poverty reduction;
• Increased inequality can offset the benefits of a rapid rate of growth for poverty reduction;
• Improved equality of income distribution is an uncertain guarantee against increased poverty when growth is weak;
• Equality is best ensured by a rapid expansion in remunerative and productive employment.