Definitions and Concepts The rate of pro-poor growth as defined by Ravallion and Chen (2003) is the mean growth rate of the incomes (or expenditure) of the poor and indicates the extent to which the poor are benefitting from growth. If we calculate the growth rate at each percentile of the distribution (ranked by income or expenditure) up to the headcount index of poverty, we can estimate the rate of pro-poor growth by taking the mean of these growth rates. The rate of pro-poor growth is related to the growth incidence curve in that the mean growth rate of the poor is the integral of the growth incidence curve up to the headcount index divided by the headcount index. The rate of pro-poor growth is also equivalent to the ordinary rate of growth times the ratio of the actual change in poverty over time (for example, using the Watts index) to the change in poverty that would have been observed had growth been distributionally neutral.
Notes Ravallion and Chen’s measure of pro-poor growth is derived from the mean of the growth rates for each quantile up to the headcount index. Note that this is different from the growth rate of mean income (consumption) of the poor. The following hypothetical example presented in Son (2003) illustrates this point:
| Variables | Incomes | Ordinary rate of growth
(Growth rate of mean income) | Actual growth rates | Rate of PPG (Mean of percentile growth rates) | | Period 1 | Period 2 | [ = 100 x (b-a)/a] | | [ = (c+d)/2] | Person in percentile x | 100 | 120 | | 20.0 | | | | | | | 26.7 | Person in percentile y | 150 | 200 | | 33.3 | | Mean income | 125 | 160 | 28.0 | | |
The comparison of the rate of pro-poor growth with the growth rate of the mean gives an indication of whether or not growth was pro-poor in a relative sense. If the distributional shifts favor the poor then the rate of pro-poor growth exceeds the ordinary rate of growth. If the shifts go against the poor then it is lower than the ordinary rate of growth. The index for the rate of pro-poor growth can be compared and ranked across countries, time periods, and regions/sectors within countries. The Watts index of poverty is defined as
where n(x) is the size of the population and m(x,z) is the number of people living below the poverty line. Unlike the popular headcount poverty index, the Watts index satisfies Sen’s (1976) focus, monotonicity, and transfer axioms.
When expressed as an integral, the Watts index can be written as 
and differentiating with respect to time, it can be shown that the change in the Watts index is the integral of the growth incidence curve (i.e. growth rates for each quantile) up to the headcount poverty index.
When this is divided by the headcount index,  , we arrive at the mean growth rate for the poor, also known as the rate of pro-poor growth. See Ravallion and Chen (2003) for details.
Quick Results with Stata Stata: If a poverty line or headcount measure is specified, the command “gicurve” will calculate the rate of pro-poor growth in addition to generating a growth incidence curve. The Stata ado file (written by Michael Lokshin) must be installed on your computer for the command to work. See the annotated examples in the Growth Incidence Curve section for step-by-step details for installation and the “gicurve” command.
Data Requirements 2 or more comparable household surveys Per capita (or per adult equivalent) expenditure or income variables with measures in real terms (e.g., constant local currency). Headcount poverty index or poverty line (only 1 number). Survey sampling weights.
Helpful Tips Remember to specify the number of years in your period so that growth rates are annualized.
Annotated Examples For examples of the Rate of Pro-Poor Growth, see the annotated examples in the Growth Incidence Curve section.
References / Related Papers Ravallion, M. and S. Chen (2003). "Measuring Pro-Poor Growth." Economics Letters 78: 93–99. (Link above is for Science Direct subscribers. Other versions are available: World Bank Policy Research Working Paper – No. 2666) Son, H. (2003). "Approaches to Defining and Measuring Pro-Poor Growth". Unpublished mimeo, World Bank, Washington DC. Kakwani, N. and E. Pernia (2000). "What is Pro-Poor Growth?" Asian Development Review 18(1): 1-16.
Growth-Inequality Decomposition | Sectoral Poverty Decomposition | Growth Incidence Curve |
Rate of Pro-Poor Growth | Growth Elasticity of Poverty |
Installation of Stata ado files | Sample data Back to Measuring the Growth-Poverty Link |
RSS