No economic issue has deservedly received more attention in the development literature than the relationship between economic growth, income distribution, and more recently poverty reduction. Yet, nowhere is the discussion of this relationship clearer and more novel than in the paper presented here by François Bourguignon. The central argument he makes is that the reduction of absolute poverty requires strong, country-specific combinations of growth and distribution policies. Although the argument is simple and appealing, it is a significant departure from conventional views. Bourguignon argues that the focus on the links between economic growth and poverty on one hand, and income distribution and poverty on the other is all but misleading.
To alleviate absolute poverty, the relevant focus should be on the interaction between growth and distribution, which policymakers can influence significantly. By implication, economic growth and distribution are not on a collision course and Kuznets' hypothesis is pronounced dead. Building on the above ideas, Mr. Bourguignon also explores some of the implications for Egypt. When he made his presentation at ECES, the audience reacted with a very rich set of comments and questions, covering issues such as the impact of taxation, subsidies, credit allocation, and asset redistribution on both growth and equality. A summary of these questions and responses are given at the end of this publication.
Author(s): François Bourguignon