Analysing poverty-growth-inequality linkage in lower and lower-middle income countries in Africa

Abstract

This research's primary purpose was to examine the poverty-growth-inequality linkage to ascertain the existence and direction of causality using data from lower and lower-middle-income countries in Africa. The result shows that while inequality is positively related to poverty, the effect of growth is negative. The short-run analysis also shows that growth had an insignificant negative relationship with poverty, while inequality had a significant positive relationship. The result also shows a long-run causality in growth and inequality given the significance of the error term while there is no long-run causality in poverty. The result shows that while growth is widening inequality, the inequality gaps created also help increase growth. The findings imply that policies towards reducing inequality in lower and lower-income countries are imperative for poverty reduction.