The Effect of Economic Growth, Income Inequality and Workers’ Remittances on the Poverty in the Developing Countries

Document Type : Original Article

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Assistant Professor of Economics, Faculty of Economic Studies and Political Science - Alexandria University

Abstract

This Paper tried to analyze and estimate the effect of economic growth, income inequality and remittances on the poverty headcount ratio in the Developing countries using Cross-Section data from countries; average over the 2000- 2019 period. In This study, we estimated linear multi-regression model using OLS method.
The estimation results indicated that the Poverty headcount ratio decreases as the rate of economic growth increases and the income inequality decreases. The results also showed that worker's remittances do not contribute to poverty reduction, but they raise economic growth, reduce income inequality and raise enrollment rates in secondary education, and these effects were statistically insignificant. In addition, the study concluded that education reduces poverty rate while inflation raises it.
The study recommends the need to increase the rate of economic growth because it is a key determinant in treating poverty, as well as improving the equity of income distribution as this helps to reduce the poverty rate. It should encourage migration and encourage remittances and should use  them in boost of economic growth and help of the poor. Education and inflation must also be addressed, which would contribute to reducing poverty.

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