Potential Drivers and Dynamics of Pro-Poor Growth in Latin American Countries

Since the 1990s, growth in Latin America and the Caribbean [LAC] has been characterized by a sharp decline in inequality and poverty. This is often described as pro-poor growth, in which the poor are particularly benefited from the distribution of growth gains. Although this concept and its operationalization are still under debate, they result extremely useful to interlink the dynamics between growth, inequality and poverty. The study analyzed the dynamics and potential drivers of pro-poor growth in 16 LAC countries using the latest available income and distribution data from the World Bank's PovcalNet. The characterization of the pro-poorness of growth was done using the decomposition of poverty changes (Kakwani, 2000), growth incidence curves and rates of pro-poor growth (Ravallion & Chen, 2003). The potential drivers were evaluated under a panel regression framework applying OLS, Fixed Effects and GMM estimators. The results suggest that LAC growth from 1991 to 2019 can be overall qualified as pro-poor as well as the specific growth pattern of each country except two. In addition to being heavily determined by income growth and changes in inequality, the magnitude of pro-poor growth is positively correlated with a larger government size.