DFID developed the construct of PPT towards the end of the 1990s, building on the concept of ‘pro-poor growth’, which symbolised the re-orientation of devel-opment towards Poverty Reduction Strategies. From the concept of pro-poor growth emerged ‘pro-poor tourism’, which was fi rst used by the management consultancy fi rm of Deloitte and Touche in a report for DFID on sustainable livelihoods in South Africa at the end of the 1990s. Both pro-poor growth and PPT are indicative of a changing paradigm in development thinking which is explained and evaluated in the next section of the chapter.
poverty also helps to increase growth though improving people’s capabilities and making them more productive members of the workforce. This sentiment is summarised in the following statement from DFID (2004: 2): ‘giving the poor access to assets and markets contributes to growth for the simple reason that it allows more of a country’s resources – its people – to become more productive.
Pro-poor growth strategies therefore enable poor people to participate in, as well as benefi t from, the growth process.’
Whilst there is little dispute about the ethos of PPG, that the poor should be active in and signifi cantly benefi t from economic development, there is a divergence of views upon the prioritisation of either ‘absolute’ or relative benefi ts that are accrued by the poor. This is not surprising as these two types of benefi ts can be interpreted as refl ecting different political ideologies and world-views about the importance of the equity of distribution of resources in society. A relative para-digm is centred upon a comparison of the changes in the incomes of the poor compared to those of the non-poor. Within this defi nition, growth can only be held as being pro-poor when the distributional shifts accompanying income growth favour the poor, that is, the incomes of poor people are growing faster than the rest of the population, leading to a subsequent reduction in income inequality within society. By contrast, in an ‘absolute’ defi nition economic growth is considered to be pro-poor if poor people benefi t in absolute terms, against an agreed measure of poverty, typically income. In this scenario, the extent to which growth is held to be pro-poor depends on the rate of change in poverty as measured by how fast the incomes of the poor are rising. This absolute defi nition is the one operationalised by the World Bank on the rationale of ‘maximising poverty reduction’ (World Bank, 2012: 1), and also by DFID on the rationale of ‘emphasising growth in the incomes of poor people’ (DFID, 2004: 2).
The World Bank’s rationale for selecting an absolute defi nition of pro-poor growth over the relative one is that focusing on inequality in wealth distribution could lead to sub-optimal households, that is, economic growth may not be fully realised because of a policy emphasis on the distribution of wealth. It is argued that a government or society prioritising a relative defi nition of pro-poor growth could favour a lower overall rate of economic growth provided that poor house-holds were benefi ting proportionally more than average, making poor househouse-holds worse off in real terms. For example, if a strategy for pro-poor growth was achieving an average income growth rate of 2 per cent and the average income growth of poor households was 3 per cent, they would be worse off than in a scenario where average growth was 6 per cent but the income of poor households grew by only 4 per cent. The fi rst scenario would fulfi l the principle of the relative defi nition of PPG, even though poor households would be materially worse off than in the second scenario, within which they are becoming relatively poorer to the rest of the society.
The two schools of thought on what constitutes pro-poor growth are refl ective of complex philosophical, political and economic arguments and positions. The rela-tive defi nition would appear to have a stronger element of social justice in its emphasis upon reducing economic inequality in society. However, according to the absolute school of thought, this pursuit of social justice could be detrimental to raising levels of income for the poor and implicitly lifting them out of poverty.
It is also possible to interpret different political paradigms operating within the two schools of thought. The relativist school could be understood as one that favours a degree of political management of the economic system in an attempt to ensure equality. An absolute defi nition could be understood as favouring laissez-faire, unbridled, market-driven development, in an attempt to push economic growth rates to their maximum – an approach synonymous with the principles of neo-liberalism. Whilst the absolute school would appear to make a compelling case that a relativist approach to PPG could actively disadvantage the poor from achieving higher incomes, it is diffi cult to assess the extent to which this repre-sents a sound economic theory or is little more than a political manoeuvre to prioritise unbridled capitalism and neo-liberalism. More credence and acceptance could be given to this approach if empirical support were lent to it through case studies of where a relative approach to PPG has actually suppressed economic growth and economically disadvantaged the poor.
The importance of these defi nitions in the evaluation of whether growth may be considered pro-poor or not is demonstrated in Figure 5.1 . The fi gure illustrates inequalities between the growth in income for the poor vis-à-vis other citizens for selected countries. The y or vertical axis of the graph measures the percentage income growth rates per annum for the poor whilst the x axis measures the overall income growth rate in income per annum.
The selection of countries is based on available datasets and traverses different periods of economic growth between the countries: Bangladesh (1984–2000), Brazil (1985–96), Chile (1987–98), Ghana (1987–97), India (1983–97) and Zambia (1991–98). The 45 degree line in the diagram represents the position of where the poor’s incomes are changing at the same rate as for the average per capita of their country. Using a relative defi nition of pro-poor growth, only Ghana would meet the key criteria of the rate of increase in the income of the poor having surpassed the overall average of the rest of the population. This is despite income having risen only 1.6 per cent in Ghana, compared to 3.2 per cent in India and nearly 5 per cent in Chile. All the other countries experienced a rise in inequality, although the incomes of the poor rose in all countries except Zambia. Thus using an absolute defi nition, pro-poor growth was achieved in Brazil, Bangladesh, India and Chile, alongside Ghana. Whilst the graph suggests that the poor will benefi t from higher rates of economic growth if it is sustained for a decade or more, it is also evident that the poor may benefi t less than the rest of the population if they
Figure 5.1 Income growth rates for the poor in selected countries Source: taken from the DFID briefi ng sheet, February 2004
are not given a priority in development strategies. The example of Ghana, where the growth of income of the poor was higher than in Brazil and Bangladesh despite a lower overall growth rate, suggests that the political and policy environment of growth can determine the relative increase in income for the poor.