This study aims to construct a dynamic poverty profile for Cameroon in order to analyze the link between economy growth, poverty and inequality in that country, which has been under structural adjustment since more than 10 years. For poverty analysis, the costs of basic needs (CBN) method is used to estimate poverty lines, and the class of FGT indices developed by Foster, Greer, and Thorbecke (1984) is calculated to study, the incidence, intensity and severity of poverty. The analysis of the relationship between economic growth, poverty and inequality is based both on Kakwani's (1993) static decomposition approach which separately measures the impact of changes in average income and income inequality on poverty, and the dynamic decomposition methods by Datt and Ravaillon (1992) and Kakwani (1997) which break down changes in poverty into growth and redistribution components. The analysis shows that, between 1983/84 and 1996, poverty in Cameroon appears to be a significant phenomenon which affects rural areas more severely than urban areas. This result suggests that rural areas, where the majority of the poor reside, should be the primary beneficiaries of efforts for fighting against poverty. Moreover, the analysis of the link between growth, poverty and income inequality according to Kakwani's (1993) method indicates that in urban areas, the absolute values of expenditure elasticities are clearly higher than unity whatever the poverty measure. Furthermore, poverty elasticities relative to expenditures and to the Gini index are higher in urban than in rural areas thus indicating the higher social fragility of urban areas with respect to economic growth and changes in income inequality. Therefore, the dynamic decomposition results of changes in poverty in growth and redistribution effects confirm the fact that the increase in poverty over the 1983/84-1986 period was due the adverse effect of the contraction in economic activity on growth which was higher than the redistribution effect and thus was more favourable to the poor. The results of this study thus improve our understanding of the nature of poverty in Cameroon and may help in the design of appropriate policies to alleviate this phenomenon.
Read full abstract