Industry Matters for Poverty : A Critique of Agricultural Fundamentalism

We use a recently constructed cross-country data set on absolute poverty to examine whether there is regional and sectoral variation in the relationship between poverty and economic growth. We find that the poverty-growth linkage is strongest in East Asia and that this linkage is essentially driven by growth in the industrial sector. By contrast, industrial growth has had little positive impact on poverty reduction in any other region. These findings are consistent with the notion that East Asia's greater success in poverty reduction lies in its greater openness and market orientation, which created a pattern of labor-intensive industrial growth that led to a rapid growth in employment and poverty reduction