Was Growth in Egypt between 2005 and 2008 Pro-Poor? From Static to Dynamic Poverty Profile

Abstract

This paper presents a detailed picture of how sustained growth in Egypt over 2005-2008 affected different groups both above and below the poverty line. This analysis, based on the Household Income, Expenditure and Consumption Panel Survey conducted by Egypt?s national statistical agency, compares the changes in the static poverty profiles (based on growth incidence curves on a cross-section of data) with poverty dynamics (relying on panel data, growth incidence curves and transition matrices). The two approaches yield contrasting results: the longitudinal analysis reveals that growth benefited the poor while the cross-sectional analysis shows that the rich benefitted even more. The paper also shows the importance of going beyond averages to look at the trajectories of individual households. Panel data analysis shows that the welfare of the average poor household increased by almost 10 percent per year between 2005 and 2008, enough to move out of poverty. Conversely however, many initially non-poor households were exposed to poverty. As a matter of fact, only 45 percent of the population in Egypt remained consistently out of (near-) poverty throughout the period, while the remaining 55 percent of Egyptians experienced at least one (near-) poverty episode. This high mobility is not a statistical artefact: it reflects the actual process of growth. Taking high vulnerability into account is essential when designing policies to protect the poor and to ensure that growth is really inclusive.

Keywords: Rural Poverty Reduction, Achieving Shared Growth, Regional Economic Development, Inequality