Interrogating sub‐Saharan Africa's high economic growth rate and low poverty reduction rate: A poverty paradox?

Abstract

Sub‐Saharan Africa's (SSA) high economic growth coincides with an increase in the level of poverty. In a panel of 40 SSA countries over a 30‐year period, while accounting for the potential spillover effect of poverty in the region. The study found that economic growth recorded over the years has not translated to poverty reduction, particularly, in resource‐rich economies of SSA. The result also shows that income inequality worsens the effect of economic growth on poverty and that the poverty‐reducing effectiveness of growth varies considerably across sectors, across space, and over time. The research findings suggest that governments across the region, particularly, in oil‐exporting countries in SSA must diversify the economy away from oil (toward the service sector) to reduce poverty in the region.