Economic Growth and Poverty in Iran (1984-2004)

Recently, many researches have been performed about the relationship between economic growth and poverty and economists have debated the notion that growth sinks down to benefit the poor or growth may well occur at the same time as large groups of people are being increasingly impoverished. This paper investigates the impact of the relationship between economic growth and poverty in Iran by using data set for the period (1984-2004) to analyze the growth elasticity of poverty, that is, 0.006 percentage poverty decline in percentage terms with a 1 percentage rise in economic growth. Economic growth contributes to tiny poverty reduction. The discussion is analytical, and empirical approaches assess the poverty elasticity of growth; the emphasis is that the relationship between growth and poverty change is non-constant. For a given poverty measure, it depends on initial inequality and on the location of the poverty line relative to mean income. In most cases, inequality is more important for poverty reduction than changes in growth.