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Socio-economic and environmental factors influenced pro-poor growth process: new development triangle

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Abstract

The developmental triangle earlier comprises economic growth, income inequality, and poverty, while in this study, we extended it by incorporating environmental and resource factors, health and education factors, sectoral value added, and some other growth-specific factors for assessing pro-poor growth, by considering Bolivian economy as a case study. The elasticity estimates show that agriculture and industrial sector growth is not pro-poor due to account of high income inequality, while services sector played a vital role in country’s economic development and supports poor livelihood in a country. Energy and environmental resources negatively impact on quality of life of the poor relative to non-poor, which create income differences among them. Health and education expenditures give favors to the poor and supported the notion of pro-poor growth, while country’s per capita income and foreign direct investment inflows increase income inequality that lead towards pro-rich growth. The results conclude that, in general, Bolivian economy growth is fairly unstable, polluted, and unhealthy that biased to the poor relative to non-poor.

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Notes

  1. PeGI index is one of the new forms of PPGI, which is based upon the argument of pro-equality growth and designed this index for classification of the countries on the basis of high (in)equality. The general form of PeGI is the product of different inequalities (exists in the health, education, and labor market) and Gini coefficient relative to the growth rate of the mean income (GRIM). The weighted index is used to formulate PeGI by the standard deviation of respective education, health, and labor market inequalities factors, which is represented by α, β, and γ respectively. The threshold value lies in between less than zero to greater than one, i.e., if PeGI value is greater than one, then the country is classified highly equitable and if PeGI value is less than zero that represented higher inequality promotes country’s economic growth on the cost of market imperfections, health, and education.

  2. Klasen (2008) argued that Bolivia economy faces largely swings in the different dimensions of high inequality in both the income and non-income factors, resulting the insignificant progress in many important pro-poor growth aspects; however, after long-term sustained efforts by different national and international agencies and government’s pro-poor growth reforms in terms of international cooperation and significant debt relief support the country’s economic growth.

  3. Zaman’s identity of PPG formulation is calculated by growth and inequality elasticity in quadratic mode and with the interaction effect of growth and inequality, and sum up with the total poverty elasticity.

  4. Zaman and Khilji (2014) proposed a number of propositions to describe pro-poorness of social expenditures in a context of Pakistan, i.e., proposition 1: social expenditures related to the entire class of poverty monotonically a decreasing function with the initial value of growth rate. Proposition 2: if the mean income is greater than the poverty line, so inequality elasticity with respect to poverty remains positive. Proposition 3: higher social expenditures growth elasticity reduce inequality elasticity to make growth pro-poor in order to reduce total poverty elasticity. Proposition 4: pro-poorness of social expenditures monotonically increases with the FGT measures of poverty.

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Acknowledgements

The authors extend their appreciation to the Deanship of Scientific Research at King Saud University for funding this work through research group no. RG-1437-027

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Authors and Affiliations

  1. School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing, China

    Haroon Ur Rashid Khan

  2. Department of Economics, University of Wah, Quaid Avenue, Wah Cantt, Pakistan

    Khalid Zaman

  3. Hailey College of Banking and Finance, University of the Punjab, Lahore, Pakistan

    Sheikh Usman Yousaf

  4. Arriyadh Community College, King Saud University, Riyadh, Saudi Arabia

    Alaa Mohamd Shoukry & Mohamed A. Sharkawy

  5. Department of Administrative Science, KSA Workers University, Cairo, Egypt

    Alaa Mohamd Shoukry

  6. College of Business Administration, King Saud University, Muzahimiyah, Saudi Arabia

    Showkat Gani

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  1. Haroon Ur Rashid Khan
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  2. Khalid Zaman
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  3. Sheikh Usman Yousaf
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  4. Alaa Mohamd Shoukry
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Correspondence to Khalid Zaman.

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Khan, H.U.R., Zaman, K., Yousaf, S.U. et al. Socio-economic and environmental factors influenced pro-poor growth process: new development triangle. Environ Sci Pollut Res 26, 29157–29172 (2019). https://doi.org/10.1007/s11356-019-06065-2

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