> The _growth-inequality_ relationship thus seems fundamental in analyzing the

> dynamics of poverty. If growth is distributionally neutral, poverty is expected to be reduced on such a path<sup>21</sup> . If one drops the neutrality assumption, then the outcome becomes ambiguous. In this case the distributional impact and the poverty implications

> depend essentially on the initial structure of the economy and the. profile of the adjustment process.

# _5. Conclusion_

This paper sought to demonstrate how one might perform distributional impact analysis within _a poverty-focused_ evaluative framework. The approach is illustrated with household level data from Guinea, using EViews as a computing platform. The focus on poverty is important for at least two reasons. Widespread poverty in the developing world remains a serious challenge for the development community. Furthermore, the ethics of _empowerment_ which underpins current development thought entails the expansion and the distribution of socioeconomic opportunities with implications for individual and collective well-being. These considerations have prompted the development community to make poverty reduction a fundamental objective of socioeconomic development, and a benchmark measure of the performance of various social arrangements. In this context, poverty is seen as the deprivation of basic capabilities to lead the type of life one has legitimate reasons to value.

> Any evaluation is characterized by the underlying _criterion._ The object of social evaluation is the determination of the extent to which prevailing social arrangements promote individual and collective well-being. This requires identification of the objects of value, and an aggregation rule for the comparison of social states. The need for aggregation raises the fundamental issue of weights to attach to each constituent of the

> aggregate. The choice of social weights is based on _value judgments._ If one believes that an incentive-preserving transfer of resources from rich to poor would increase collective

> well-being, then the _maximin principle_ provides an adequate foundation to a poverty-

> focused evaluation. When implemented in the context of additively separable social welfare functions, the principle leads to social evaluation functions that are decomposable

> into two components revealing both the average living standard and its distribution

> among the population. The distribution component is equal to the covariance between the living standard and the social weights. Thus, the maximin approach to social evaluation offers a way of combining both efficiency and equity considerations in social evaluation. In addition, the linearity of the covariance operator allows a factor

> decomposition of the inequality components on the basis of the constituents of the living standard.

Further specification of social weights is needed to determine the extent of poverty focus of the evaluation. The Gini family of indices provides a weighing scheme based on relative ranks of individuals (according to some criterion of social desert), and on a focal parameter indicating the degree of aversion to inequality. This aversion

> 21 The time frame is important in this context as we should distinguish between short and long-run impacts associated respectively with fluctuations in output, and steady-state growth in capacity output.

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