Bibliographic Note This report draws on a wide range of World Bank White, Laurence Whitehead, L. Alan Winters, Quentin documents and on numerous outside sources. Back- Wodon, Shahin Yaqub, and David Zilberman. ground papers and notes were prepared by Daron Background papers for the report are available ei- Acemoglu, Michelle Adato, Mary B. Anderson, Michael ther on the World Wide Web (www.worldbank.org/ R. Anderson, Simon Appleton, Gareth Austin, Michael poverty/wdrpoverty) or through the World Develop- Banton, Pranab Bardhan, Paolo Belli, Timothy Besley, ment Report office. The views expressed in these pa- Pilwha Chang, Monique Cohen, Michelle Connolly, pers are not necessarily those of the World Bank or of Richard C. Crook, Robert A. Dahl, Partha Dasgupta, this report. Shelton Davis, Alain de Janvry, Stefan Dercon, Ann Many people, both inside and outside the World Elwan, Gary S. Fields, Gary Gereffi, Gregory Graff, Bank, gave advice and guidance to the team. Valuable George Gray-Molina, Lawrence Haddad, John Har- comments and contributions were provided by Taoufik riss, Ronald J. Herring, John Hoddinott, Naomi Hos- Ben Abdallah, Richard Adams, Nisha Agrawal, Sadiq sain, Peter P. Houtzager, Rajshri Jayaraman, Noushin Ahmed, Martha Ainsworth, George Akerlof, Harold Kalati, Marcus Kurtz, Edward E. Leamer, Jennifer Alderman, Titus Alexander, Jock Anderson, Hutton Leavy, David Lindauer, Michael Lipton, Frances Lund, Archer, Anthony Atkinson, Gareth Austin, Robert Daniel S. Manning, James Manor, Martha Argelia Ayres, Malcolm Bale, Namrata Bali, Andrew Balls, Martinez, Jacob Meerman, Mick Moore, Samuel A. Abhijit Banerjee, Pranab Bardhan, Christopher Barham, Morley, Kimberly J. Niles, Anthony Oliver-Smith, Douglas Barnes, Tamsyn Barton, Ananya Basu, Kaushik Jonathan Pattenden, Anan Pawasuthipaisit, Louis Basu, Amie Batson, Anthony Bebbington, Alan Berg, Pouliquen, Kameshwar Prasad, James Putzel, Danny Timothy Besley, Gordon Betcherman, Andre Beteille, Quah, Elisa Reis, James A. Robinson, Francisco Ro- Surjit Bhalla, Vinay Bhargava, Ela Bhatt, Mihir R. driguez, Elisabeth Sadoulet, Sombat Sakuntasathien, Bhatt, Hans Binswanger, Nancy Birdsall, Yonas Biryu, Peter K. Schott, Jennefer Sebstad, Saurabh Sinha, Lina Mark Blackden, Rebecca Blank, David Bloom, Zelco˘ Song, Smita Srinivas, Alan Sturla Sverrisson, Robert Bogeti´c, Jan Bojo, Rene Bonnel, Ed Bos, César Bouil- M. Townsend, Ben Turok, Ashutosh Varshney, Howard lón, François Bourguignon, Samuel Bowles, Carlos A. 205 ⁄ Primo Braga, John Briscoe, Penelope Brooks, Stephen Leete, Arianna Legovini, Danny Leipziger, Brian Levy, Brushett, Robin Burgess, Sara Calvo, Sarah Cambridge, Maureen Lewis, Michael Lipton, Jennie Litvack, Laszlo Roy Canagarajah, Gerard Caprio, Teresa Carbo, Guy Lovei, James Christopher Lovelace, Landis Mackellar, Carrin, Soniya Carvalho, Robert Chambers, Jacques François Régis Mahieu, Nick Manning, Tamar Manuelyan Charmes, Celine Charveriat, Mirai Chatterjee, Mrinal Atinc, Timothy Marchant, Rachel Marcus, Tiffany Mar- Datta Chaudhuri, Rodrigo Chaves, Sandeep Chawla, lowe, Ricardo Martin, Will Martin, Antonio Martin del Shaohua Chen, Susan Chen, Kenneth Chomitz, Alberto Campo, Keith Maskus, Andrew Mason, Simon Maxwell, Chong, Ralph Christy, Mariam Claeson, John Clark, Bill Mayville, Elizabeth McAllister, Milla McLachlan, Monique Cohen, Paul Collier, Tim Conway, Giovanni An- John Mellor, Jean-Roger Mercier, Tom Merrick, Rick drea Cornia, Uri Dadush, Dana Dalrymple, Amit Dar, Messick, Dilip Mookherjee, William Moomaw, Michael Koen M. Davidse, Adrian Davis, Gloria Davis, Alain de Moore, Mick Moore, Jonathan Morduch, Daniel Mor- Janvry, Samantha De Silva, Naa dei Nikoi, Angus Deaton, row, Robert Moulie, Peter Mousley, Ranjana Mukherjee, Klaus Deininger, Lionel Demery, Stephen Denning, Ste- Joseph Mullen, Rinku Murgai, Edmundo Murrugara, fan Dercon, Mahendra Dev, Shantayanan Devarajan, Philip Musgrove, David Nabarro, Mustapha Nabli, Reena Ishac Diwan, David Dollar, Philippe Dongier, Donna Nanavaty, Deepa Narayan, Richard Newfarmer, Juan Dowsett-Coirolo, Jean Drèze, Jean-Luc Dubois, Steven Pablo Nicolini, Michel Noel, Barbara Nunberg, Veronic Durlauf, Chris Dye, Tim Dyson, William Easterly, Judith Nyhan, Abena D. Oduro, Marcelo Olarreaga, Jonathan Edstrom, Dag Ehrenpreis, Lars Ekengren, Ibrahim El- Olsson, Azedine Ouerghi, Mead Over, Margaret Owen, badawi, David P. Ellerman, Diane Elson, Gunnar Eske- Howard Pack, Truman Packard, Sheila Page, Robert Pala- land, Wolfgang Fengler, Marco Ferroni, Deon Filmer, Ben cios, Ok Pannenborg, Sulekha Patel, Harry Anthony Pa- Fine, Ariel Fiszbein, Ann Florini, Emmanuel Forestier, trinos, Guillermo Perry, Jean Pesme, Patti Petesch, Guy Justin Forsyth, Paul Freeman, Jose Furtado, Andreas Pfeffermann, Claire Pierangelo, Jean-Philippe Platteau, Galanakis, Emanuela Galasso, Joaquin Garcia, Michel Boris Pleskovic, Louis Pouliquen, Alexander Preker, Gio- Garenne, Roberta Gatti, Guido Geissler, Alan Gelb, Paul vanna Prennushi, William C. Prince, Lant Pritchett, Fe- J. Gertler, Coralie Gevers, Ashraf Ghani, Maitreesh licity Proctor, James Putzel, Dagmar Raczynski, Atiqur Ghatak, Alan Gilbert, Michael Goldberg, Jeff Goldstein, Rahman, Mamphela Ramphele, James Rauch, Martin Fr. Xabier Gorostiaga (and his colleagues from Asociación Ravallion, Susan Razzaz, Thomas Reardon, Ritva Reinikka, de Universidades Confiadas a la Compañía de Jesus en Ana L. Revenga, Carolyn Reynolds, Helena Ribe, Michelle America Latina), Vincent Gouarne, Heather Grady, Peter Riboud, Peter Roberts, Richard D. Robinson, Alberto Ro- Grant, Stefanie Grant, Cheryl Gray, Duncan Green, Mar- driguez, John Roemer, Halsey Rogers, Andrew Rogerson, garet Grosh, Sumit Guha, Patrick Guillaumont, Sanjeew Jaime Ros, Jaime Saavedra, Elisabeth Sadoulet, David E. Gupta, Davidson R. Gwatkin, Lawrence Haddad, Peter Sahn, Joanne Salop, Susana Sanchez, Todd Sandler, Sven Hakim, Gillette Hall, Kristin Hallberg, Jeffrey Hammer, Sandstrom, Filomeno Santa Ana, Justine Sass, David Sat- Lucia Hanmer, Nancy Happe, Caroline Harper, Ricardo terthwaite, Dieter Schelling, Anita Schwarz, Christopher Hausmann, Yujiro Hayami, John Healey, Gerry Helleiner, Scott, Jennefer Sebstad, Marcelo Selowsky, Amartya Sen, Jesko Hentschel, Alicia Herbert, Norman L. Hicks, John Elena Serrano, Nemat Shafik, Shekhar Shah, Jim Shea, Hoddinott, Robert Holzmann, Peter P. Houtzager, Albert Geoffrey Shepherd, Lynne D. Sherburne-Benz, John D. D. Howlett, Chia-Hsin Hu, Gregory Ingram, Keiko Itoh, Shilling, Paul Bennett Siegel, Hilary Silver, William Sil- Vijay Jagannathan, Selim Jahan, K. Jankovsky, Mahieu Jar- verman, Marcia Simoes, John Sinclair, Saurabh Sinha, ret, Renana Jhabvala, Emmanuel Jimenez, Ian Johnson, Richard Skolnick, Tova Maria Solo, Paul Spray, Lyn Gerd Johnsson, Ben Jones, Christine Jones, Steen Jor- Squire, T. N. Srinivasan, Nicholas Stern, David Stiedl, gensen, Sonia Kapoor, Dani Kaufmann, Masahiro Kawai, David Stifel, Joseph E. Stiglitz, Kalanidhi Subbarao, Allen Kelley, Charles Kenny, Michel Kerf, Christine Kes- Parita Videt Suebsaeng, Eric Valdeman Swanson, Vinaya sides, Roger V. Key, Anupam Khanna, Stuti Khemani, Swaroop, Simon Szreter, Cecilia Tacoli, Kazuo Takahashi, Tony Killick, Ronald Kim, Elizabeth King, Stephan Vito Tanzi (and the team at the Fiscal Affairs Department Klasen, Jeni G. Klugman, Steve Knack, Grzegorz Kolodko, of the International Monetary Fund), David Tarr, Ju- Valerie Kozel, Annette Krauss, Alcira Kreimer, Jean-Louis dith Tendler, Sumeet Thakur, Duncan Thomas, Kirsten Lamboray, Jack Langenbrunner, Patricia Laverley, Richard Thompson, Robert Thompson, Erik Thorbecke, Mari- ano Tommasi, Lee Travers, Kerstin Trone, Carrie Tudor, Chapter 1 Wendy Tyndale, Zafiris Tzannatos, Christopher Udry, Al- Unless otherwise noted, all quotations in the chapter are drawn from berto Valdes, Dominique van de Walle, Julie van Dome- Voices of the Poor (Narayan, Chambers, Shah, and Petesch 2000; Narayan, Patel, Schafft, Rademacher, and Koch-Schulte 2000). len, M. Willem van Eeghen, Wouter van Ginneken, 1. Sen 1999, p. 87. Warren Van Wicklin, Jan Vandemoortele, Krishna Vatsa, 2. Szekély and others forthcoming. Anthony Venables, Mathew A. Verghis, Louis-Charles 3. Haddad and Kanbur 1990. Viossat, Tara Vishwanath, Milan Vodopivec, Joachim 4. Ravallion and van de Walle 1991. von Amsberg, Jayshree Vyas, Robert Wade, Mike 5. The poverty gap index is the sum of the income shortfalls Waghorne, Adam Wagstaff, Michael Walton, Kevin of all poor people—the amount by which their incomes fall short of the poverty line—divided by the total population. The squared Watkins (and an Oxfam team), Catherine Watt, Richard poverty gap index is the sum of the squared shortfalls. The poverty Webb, L. Alan Winters, Quentin Wodon, Adrian Wood, gap index is John Worley, Gustavo Yamada, Jacob Yaron, Shahid 1 Q α ∑()yy– Yusuf, Roberto Zagha, and Elaine Zuckerman. i , N i =1 The team was assisted by students from the In- – where N = the total population, y = the poverty line, ternship Program of the Washington Center: Anju Ag- yi = income of individual i, Q = the total population below the garwal, Waldo Aleriano, Juan Carlos Arandia, Hector poverty line, and α = 1. For the squared poverty gap index, Cabrera, Mario de la Cruz, Celeste de la Huerta, α = 2. When α = 0, the measure is the well-known headcount ratio. Joaquin de la Torre, Alison Drury, Nilima Gulrajani, See Foster, Greer, and Thorbecke (1984) and Foster and Shorrocks Tomoko Hagimoto, Daniel Hernandez Ruiz, Vir- (1988). ginia Iglesias, Mika Iwasaki, Alejandra Lua,