A Decade of Sub-national Pro-poor Growth in Pakistan

Economic Growth has been volatile in Pakistan; so is the case with poverty and inequality. It is a matter of great intellectual concern to know why growth has been pro-poor at some occasions of history in some specific regions while anti-poor in other areas. This paper disaggregates Poverty Equivalent Growth Rate (PEGR) at urban–rural sectors of Pakistan and across its provinces to measures growth pro-poorness in both relative and absolute terms from 2001 to 2012. Results show an overall counteracting effect of increased inequality on growth elasticity of poverty at national level but with significant regional contrast. Growth at urban level is found pro-poor (anti-poor) for all poverty measures in relative (absolute) term. This is contrary to the rural regions that experienced anti-poorness in both relative and absolute terms. Growth rate and degree of pro-poorness exhibited inverse relationship during different sub-periods. Sub-national PEGR analysis shows differential pattern of pro-poorness across regions and time. Growth proved relatively pro-poor in Balochistan and Sindh while it turned to be anti-poor in the Punjab and, Khyber Pakhtunkhwa. Though the relative pace of rural poverty reduction is found higher across different provinces, yet rural areas still markedly lagged behind their urban counterparts in terms of growth pro-poorness. This is suggesting relatively fewer growth gains to the rural poor across different regions of the country. A consistent doses of long term pro-poor and distributive policies through fiscal and monetary management can be a workable option to minimize the gap between the rich and the poor.