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The Contributions of Economic Growth and Redistribution to Poverty Reduction in Nigeria

The Contributions of Economic Growth and Redistribution to Poverty Reduction in Nigeria

 

Abstract: A common narrative on Africa’s development process is that specific country policies of income growth and redistribution are necessary for poverty reduction. This study investigated the relative contribution of economic growth and redistribution on poverty changes over time in Nigeria. The study made use of the national household survey data sets collected by the National Bureau of Statistics. Three poverty indices (FGT) and the Shapley decomposition methodologies were applied. For
robustness, complementary analyses, such as the stochastic dominance test and growth incidence analysis were applied. The results revealed a higher poverty incidence in 1996 than in 2004. It was robust across various levels of poverty lines for the whole country and across sectors. The gains from growth and redistribution for the country were respectively 16% and 5%. Although poverty reduced, the incidence level for the whole country, rural and urban sectors were respectively 60%, 65% and 50%. A deeper reduction in poverty depended on how effectively and efficiently markets and the distributional systems were working. The analysis suggested better targeting services for the poor.

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