The Poverty-Growth-Inequality Triangle: Asia 1960s to 2010s

The main objective of this paper is to disentangle the poverty-growth-inequality triangle for Asia, its sub-regions and individual economies by constructing poverty and inequality profiles, decomposing poverty changes and modelling inequality. Due to a shortage of unit record data, analytical techniques are developed for estimating the poverty headcount ratio and regional inequality with minimum data requirements. Analytical results confirm significant reductions in poverty across the board due to fast growth, although the benign effect of growth on poverty was offset by worsening distributions in many economies. Furthermore, the poverty-reducing effect of growth has been diminishing over time and converging to 0 for many countries. Also, the cost of rising inequality in Asia was found to be surprisingly large in terms of missed poverty reduction. Looking ahead, Asia is expected to eradicate abject poverty soon but likely to continue facing high inequality, particularly income gaps between economies.