# 1. Introduction

Since the early 1990s, the world has made tremendous progress in reducing extreme poverty. The global poverty rate, defined by the World Bank’s extreme poverty line of US$2.15 a day (in 2017 Purchasing Power Parity), decreased from 38 percent in 1990 to less than 9 percent by 2019 (World Bank, 2022). This progress was mainly driven by East Asia and the Pacific (EAP), the region that accounted for the bulk of the poor in 1990, where poverty fell from 66 percent in 1990 to 1 percent by 2019. EAP’s success implies that the future of global poverty reduction now lies squarely with Sub-Saharan Africa (SSA) and, to a lesser extent, South Asia. In 2019, 60 percent of the global poor lived in SSA, and this is projected to increase to 87 percent by 2030 (World Bank, 2022a). Progress in Sub-Saharan Africa will determine the success of global poverty reduction efforts in the coming decades.

Following two largely lost decades, growth in SSA accelerated to an average of 5 percent per year between 2000 and 2014, resulting in a reduction in the poverty rate from 56 percent in 2000 to 38 percent by 2014. However, growth faltered after 2014 and, given rapid population growth, per capita GDP in SSA was slightly lower in 2019 than in 2014.<sup>2</sup> Yet even during SSA’s high growth period, there were concerns around the extent to which this growth benefited the poor. In reference to the period of high growth, Bhorat and Naidoo (2017) write that “ _Africa’s socioeconomic variables have not, however, matched this impressive economic performance_ ”. Similarly, examining the growth, inequality, and poverty nexus in SSA, Thorbecke (2023, p ii81) writes that “ _It is evident that economic growth in SSA in the past two decades has not been sufficiently inclusive_ ”, while Fosu (2023, p ii167) states that “ _Nonetheless, despite the apparent decline in poverty in SSA during the latter period_ [SSA’s growth resurgence period since the late-1990s], _the pace has been slow compared to other regions_ ”. In short, there is a widespread belief that economic growth in SSA has been less poverty-reducing relative to other regions or, in other words, that the growth elasticity of poverty – the percentage change in poverty rates for a percent change in a per capita indicator of economic output – in SSA has been systematically lower.

This paper uses the most up-to-date database of comparable growth spells in developing countries between the early 1980s and 2021 to test this assertion and identify the main factors that make economic growth in SSA less poverty reducing. Compared to the early research on the growth elasticity of poverty (henceforth GEP),<sup>3</sup> we take advantage of important progress made in recent years in the quality and availability of household data. In particular, we benefit from larger sample size and cover a larger share of the developing world’s population thanks to the strong increase in the number of household surveys since the early 2000s, including in previously un- or under-covered countries. We also benefit from the efforts to enhance intertemporal comparability of surveys within countries and include only comparable poverty estimates. While the main focus of the paper is on assessing regional differences in the GEP, the paper seeks to address three main questions: (i) does SSA, the continent with the highest poverty rate and also the slowest progress on poverty reduction, have a GEP that is significantly lower relative to the

> 2 In this paper, we consider the region as a whole (Sub-Saharan Africa). The reader is advised that there is large heterogeneity and several non-resource rich countries have kept on growing fast post 2014.

> 3 See, for instance, Ravallion and Chen (1997), Ravallion (2001), Bourguignon (2003), Ravallion (2004), Adams (2004), . Kakwani (1990; 1993) introduced the concept of the growth elasticity of poverty reduction but defined this as a partial elasticity, holding the distribution constant, resulting in large elasticities in absolute value.

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