THE POOR ALSO SHARE IN GROWTH

The results show that there is little support for the view expressed in the earlier literature on Asia that the consumption patterns of the rural rich are more oriented to growth than those of the poor. Whereas in Asia the rich typically spend higher shares of increments to income on nontradable manufactured goods and services, in Africa, according to this report, the poorest one-third of households in three of the five comparable country samples had higher MBSs for nontradable items than the richest one-third of households (Figure 4). This is probably because food is more likely to be a nontradable item in Africa than in Asia. (However, this finding ignores the fact that the rich may invest more of their income than the poor.) While it may be over-interpreting the results to infer that growth policies should direct income to the poor, there is clearly no basis for directing growth-oriented policies exclusively to the rich.

Figure 4 - Differences in farm growth multipliers between the poorest and richest income terciles, by source

A larger share of additional income of the poor goes to farm nontradables such as coarse grains, meat, and fruits and vegetables than that of the rich (except in Niger).

Finally, more attention should be paid to increasing the supply-responsiveness of major nontradable rural consumption items, including local starchy staples and livestock products. For growth to continue unabated, people must have a ready supply of the goods they wish to purchase at reasonable prices as their incomes go up. How to increase the elasticity of supply of the nontradables that had the largest MBSs in this report is a subject for further research. Successfully promoting exports without paying attention to nontradable consumer items could lead to rising prices for local goods and increased costs of subsistence and production - both inimical to export-led growth.

Figure

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