Poverty Reduction and Economic Structure: Comparative Path Analysis for Mozambique and Vietnam

UNU-WIDER working paper 11/2010; 2010/122

Posted: 26 Nov 2014

See all articles by Channing Arndt

Channing Arndt

United Nations - World Institute for Development Economics Research (UNU/WIDER)

Finn Tarp

University of Copenhagen - Department of Economics

James Thurlow

UNU-WIDER; International Food Policy Research Institute (IFPRI)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2010

Abstract

While economic growth generally reduces income poverty, there are pronounced differences in the strength of this relationship across countries. Typical explanations for this variation include measurement errors in growth-poverty accounting and countries’ different compositions of economic growth. We explore the additional influence of economic structure in determining a country’s growth-poverty relationship and performance. Using multiplier and structural path analysis, we compare the experiences of Mozambique and Vietnam — two countries with similar levels and compositions of economic growth but divergent poverty outcomes. We find that the structure of the Vietnamese economy more naturally lends itself to generating broad-based growth. A given agricultural demand expansion in Mozambique will, ceteris paribus, achieve much less rural income growth than in Vietnam. Inadequate education, trade and transport systems are found to be more severe structural constraints to poverty reduction in Mozambique than in Vietnam. Investing in these areas can significantly enhance the effectiveness of Mozambican growth to reduce poverty.

Keywords: poverty, multipliers, structural path analysis, Mozambique, Vietnam

JEL Classification: O10, O58, C69

Suggested Citation

Arndt, Channing and Tarp, Finn and Thurlow, James, Poverty Reduction and Economic Structure: Comparative Path Analysis for Mozambique and Vietnam (November 2010). UNU-WIDER working paper 11/2010; 2010/122, Available at SSRN: https://ssrn.com/abstract=2530951

Channing Arndt (Contact Author)

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6 B
Helsinki, FI‐00160
Finland

Finn Tarp

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

James Thurlow

UNU-WIDER ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

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