This study introduces the concept of pro-poor growth and its significance in the context of Korea by analyzing the changes in Korea’s distributive structure around the 1997 foreign exchange crisis.
Absolute poverty still remains an issue in Korea, and economic growth does not automatically reduce poverty as it did during the country’s development era. Korea’s absolute poverty rate rapidly dropped at a yearly average of 8.3% from 1982 to 1992. Both economic growth and improving income distribution made this possible. After 1993, however, the rate drop slowed and, sometimes, rose again. This change occurred in part because economic growth began to slow, but more importantly because of rapidly worsening income distribution. Regression analyses of Korea and other countries confirm that the rate of growth, together with distribution patterns, affect poverty in a significant way. Studies find the following to hold true in Korea: 1) Economic growth is the primary cause of poverty reduction; 2) Economic growth combined with improved distribution accelerates poverty reduction; and 3) High income inequality hampers poverty reduction.
Two important indicators of pro-poor growth are the KP index, which stresses distribution, and the RC index, which highlights growth. The two indexes did not significantly differ from each other in the case of Korea.
This study shows that both growth and distribution play important roles in poverty reduction, but it does not provide the actual mechanisms of how growth and distribution help reduce poverty. For example, although the study confirms that not only growth but income distribution had an impact on poverty in the 80s and the late 90s, it does not deal with policies and mechanisms that made growth possible without increasing income inequality. Further studies that shed light on these points will be of great use to the pursuit of pro-poor growth strategy.
빈곤감소적 성장(Pro-poor growth)
|Series Title; No||정책연구시리즈|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < General|
|Holding||KDI; KDI School|