Spatial Poverty in Benin: Human Capital, Isolation and Governance

Abstract

Benin has witnessed significant economic growth over the past decades, positioning itself as a rising economy in the west African subregion. This notwithstanding, persistent subnational differences in poverty were observed, suggesting a challenge of growth inclusiveness. This study provides evidence on the effects of human capital differences, isolation, and institutional quality on the determinants of household expenditure and factors that explain the southern-northern welfare gaps. This study employs a decomposition technique based on re-centred influence functions. I find significant spatial differences in consumption expenditure at the mean and across selected quantiles, with an increasing gap along welfare distribution and driven largely by differences in the returns to households’ endowments in social public infrastructure. Access to energy and human capital measured by the education level of the head of the household generally favours the rich in the leading region and contributed significantly to explaining the difference in the welfare gap. The difference in access to roads widens the gap for the poor, whereas governance quality at the local level reduces it. To reduce the poverty gap, a public policy to improve returns of household endowments in the social sector should be integrated with other initiatives to address the underlying determinants of inequalities.