Though economic growth often contributes to poverty alleviation, growth in certain sectors provides more direct aid to the poor than growth in others, Norman Loayza told a crowded Joukowsky Forum at the Watson Institute for International Studies Wednesday night. Loayza, a lead economist at the World Bank, delivered a talk titled "The Composition of Growth Matters for Poverty Alleviation," presented by the Department of Economics in conjunction with the Colloquium on Comparative Research.
Loayza's lecture, which em-ployed complex economic concepts, attracted mainly graduate students and faculty members. Though he used a number of mathematical formulas and graphs to illustrate his argument, Loayza also offered general statements about the contribution economic growth makes to poverty alleviation.
Multiple cross-country, time-series and household studies point to the benefits of economic growth, Loayza said, though such progress generates a wide range of effects on poverty.
"A sector's poverty-reducing capacity is related to its intensity in the employment of unskilled labor," Loayza said. "For poverty alleviation, not only the size of growth matters, but also its composition in terms of intensive use of unskilled labor."
The most popular approach to studying the heterogeneity of poverty's responses to economic development involves a focus on the socioeconomic conditions of the population, such as literacy, morbidity and urbanization, Loayza said. However, Loayza took a different approach, emphasizing the characteristics of output growth in terms of labor intensity and sectoral composition.
Loayza argued that agricultural growth has a great ability to alleviate poverty, as it is one of the most labor-intensive sectors. The geographic location of a sector's production and the incidence of poverty in the area help to explain why growth in some industries is more poverty-reducing than others.
After the lecture, Stelios Michalopoulos GS said that Loayza's talk was "interesting," though he remained unconvinced by Loayza's presentation of empirical analysis.
"Those people engaged in policy-oriented work need to examine more convincing evidence about the empirical procedure before they draw any conclusions," Michalopoulos said.
