A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Cardozo Silva, Adriana Rocío Book Economic Growth and Poverty Reduction in Colombia Göttinger Studien zur Entwicklungsökonomik / Göttingen Studies in Development Economics, No. 29 Provided in Cooperation with: Peter Lang International Academic Publishers Suggested Citation: Cardozo Silva, Adriana Rocío (2010) : Economic Growth and Poverty Reduction in Colombia, Göttinger Studien zur Entwicklungsökonomik / Göttingen Studies in Development Economics, No. 29, ISBN 978-3-653-00274-4, Peter Lang International Academic Publishers, Frankfurt a. M., http://dx.doi.org/10.3726/978-3-653-00274-4 This Version is available at: http://hdl.handle.net/10419/178430 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ www.econstor.eu Göttinger Studien zur Entwicklungsökonomik Göttingen Studies in Development Economics Herausgegeben von/ Edited by Hermann Sautter und/and Stephan Klasen Bd./Vol. 29 Adriana Rocío Cardozo Silva Economic Growth and Poverty Reduction in Colombia PETER LANG Internationaler Verlag der Wissenschaften 4HISåBOOKåANALYSESåTHEåDISTRIBUTIONALåEFFECTSåOFåECONOMICåGROWTHåONåDIFFERENTå DIMENSIONSåOFåPOVERTYåINå#OLOMBIAå)TåPROVIDESåAåMICROECONOMICåPERSPECTIVEåONå HOWåECONOMICåGROWTHåAFFECTEDåPOVERTYåANDåINEQUALITYåATåTHEåHOUSEHOLDåLEVEL å ASåWELLåASåAåMACROECONOMICåPERSPECTIVEåONåTHEåEFFECTSåOFåGROWTHåONåREGIONALå LIVINGåSTANDARDSå4HEåSTUDYåINCORPORATESåRECENTåDISCUSSIONSåONåMULTIDIMENSIONALå ANALYSISåOFåWELLåBEINGåANDåGOESåBEYONDåTRADITIONALåINCOMEåBASEDåMEASURES å THEREBYå CONTRIBUTINGå TOå THEå ONGOINGå RESEARCHå ONå HOWå TOå MEASUREå PRO POORå GROWTHå ANDå ONå THEå IMPORTANCEå OFå INCORPORATINGå DIFFERENTå DIMENSIONSå OFå WELLå BEINGåINåCONVERGENCEåANALYSIS !DRIANAå2OC¤Oå#ARDOZOå3ILVA å#OLOMBIAN åHOLDSåAå0H$åINå%CONOMICSåFROMåTHEå 5NIVERSITYåOFå'TTINGENå$URINGåHERå0H$åSTUDIESåSHEåWORKEDåASåRESEARCHåANDå TEACHINGåASSISTANTåATåTHEå#HAIRåOFå$EVELOPMENTå%CONOMICSåANDåASåCONSULTANTå FORåTHEå7ORLDå"ANKå0REVIOUSLYåSHEåHADåWORKEDåASåRESEARCHåFELLOWåFORåTHEå)NTER !MERICANå$EVELOPMENTå"ANKå4HEåAUTHORåALSOåHOLDSåAå-ASTERåINå)NTERNATIONALå %CONOMICSåFROMåTHEå5NIVERSITYåOFå'TTINGENåANDåAå"ACHELORåINå%CONOMICSåFROMå THEå5NIVERSIDADå.ACIONALåDEå#OLOMBIAå WWWPETERLANGDE Economic Growth and Poverty Reduction in Colombia Göttinger Studien zur Entwicklungsökonomik Göttingen Studies in Development Economics Herausgegeben von/ Edited by Hermann Sautter und/and Stephan Klasen Bd./Vol. 29 PETER LANG Frankfurt am Main · Berlin · Bern · Bruxelles · New York · Oxford · Wien Adriana Rocío Cardozo Silva Economic Growth and Poverty Reduction in Colombia PETER LANG Internationaler Verlag der Wissenschaften Bibliographic Information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available in the internet at http://dnb.d-nb.de. Open Access: Die Online-Version dieser Publikation ist unter der internationalen Creative Commons Lizenz CC-BY 4.0 auf www.peterlang.com und www.econstor.eu veröffentlicht. Erfahren Sie mehr dazu, wie Sie dieses Werk nutzen können: http://creativecommons.org/licenses/by/4.0. Dieses Buch ist Open Access verfügbar aufgrund der freundlichen Unterstützung der ZBW – Leibniz-Informationszentrum Wirtschaft. D 7 ISSN 1439-3395 ISBN 978-3-653-00274-4 © Peter Lang GmbH Internationaler Verlag der Wissenschaften Frankfurt am Main 2010 www.peterlang.de A mis queridos padres Daniel y Gloria Editor’s Preface Research on the linkages between economic growth and poverty has expanded vigorously in recent years. While the importance of growth to reduce poverty is widely accepted, the conceptualization on how fast and sustained growth needs to be to benefit the poor is a topic of large discussion among economists. Despite extensive literature on this topic and important progress on measurement issues, there is still an open debate on how to evaluate the impact of different growth spells on poverty. For instance, there are controversial interpretations on how to value growth scenarios where poverty falls but inequality increases. The renewed emphasis in this topic emerged after low and uneven progress in poverty reduction in many development countries. In the case of Colombia, economic growth and poverty reduction in in the decades of 1980 and 1990 were slow, while inequality remained high and stable. However, progress made in these years reversed rapidly once the economy entered in recession at the end of the 1990s, confirming the importance of sustained economic growth for poverty reduction. The dissertation of Adriana Cardozo offers a thorough empirical study on the distribu- tional effects of economic growth on different dimensions of poverty in Colombia. It provides a microeconomic perspective on issues pertinent to poverty and inequality at the household level, as well as a macroeconomic perspective on how economic growth affects changes in regional living standards using data by department. The study incorporates recent discus- sions on multidimensional analysis of well being and goes beyond traditional income based measures, building an important piece to understand the ongoing research on how to measure pro-poor growth and on the importance of incorporating different dimensions of well being in convergence analysis. This book is composed of four chapters. After a brief introduction to the main issues, the author presents in chapter 2 the distributional effects of growth on different income per- centiles using Growth Incidence Curves and Pro-Poor Growth measures and offers a compre- hensive discussion on how a contraction in economic growth adversely affects the poor. In chapter 3, Cardozo builds key indices to track other dimensions of well-being different than income and examines if the recession had a similar effect on them than on traditional income viii EDITOR’S PREFACE based measures. It presents a solid empirical application on the construction and interpreta- tion of living standard indices with two different weighting systems, discussing the problems associated to each one. Chapters 3 and 4 analyze the relation between growth and poverty from a very different perspective. The author uses as units of analysis the Colombian departments, and question in how far disparities decreased during the last decades. In chapter 3, Cardozo uses production and disposable income by department to examine if there was convergence among depart- ments between 1975 and 2000. This chapter offers a solid revision of the main econometrical tools to test the convergence hypothesis and undertakes an empirical analysis in the Colom- bian case. By comparing the traditional regression approach with the distributional one, it offers robust results on convergence in Colombia and raises attention on the importance of data quality. Chapter 4 departs from the traditional used variables in convergence analysis and uses social indicators to see if welfare differences between Colombian departments diminished. The author selects several variables and contrasts regression and distributional approaches from 1975 to 2005. This chapter shows the importance of studying convergence in non- income indicators, which reflect more closely than income progress in population well-being. The collection of studies in this book offer a deep country case analysis on the relation between economic growth and poverty, using microeconomic but also aggregated data. It brings up the most recent discussions on multidimensional poverty measurement, and on multidimensional convergence analysis, offering the reader a comprehensive analysis of the country. Prof. Stephan Klasen, Ph.D Goettingen, March 2010 Acknowledgments Writing a dissertation is a process in which one starts with an idea, a blank sheet of paper and a pencil. It resembles a trip, in which the final destination is known, but the path to follow first needs to be created. The necessary tools, knowledge and techniques seem unaccessible at the beginning, but can be acquired during the trip. This process is composed of several rounds of trial and error before finding the way, and is thus a hard test for patience, perseverance and self discipline. Fortunately during this trip I had support, advise and encouragement from numerous people, to whom I want to express my sincere gratitude. I am extremely thankful to my parents and my sister. Regardless