How to achieve pro-poor growth in a poor economy. The case of Burkina Faso

Type Report
Title How to achieve pro-poor growth in a poor economy. The case of Burkina Faso
Publication (Day/Month/Year) 2004
Burkina Faso is a Sub-Saharan, landlocked country, with very limited rainfall, very weak natural
resource endowments and with a low human as well as physical capital stock. As a mainly
agricultural and cotton exporting country its economic performance depends heavily on climatic
conditions and the world market price for cotton. Public revenue is for a large part financed
through external aid. Despite the significant economic growth achieved during the last ten years -
partly attributable to the currency devaluation in 1994, a favorable development of the world
market price for cotton and structural adjustment- and a steady increase in social expenditure,
official poverty estimates suggested that poverty did not decrease during that period, but
stagnated at a high level with roughly 45% of the population being poor. Hence, the question
aroused: Why did the poor not benefit from growth and what should be done so that growth
becomes pro-poor in the future?
To answer this question first we carried out a reassessment of poverty and inequality trends. Past
estimates were mainly affected by three sources of bias: changes in the household survey design,
changes in the methodology used to compute household expenditure aggregates, and high
relative price variations over time, which were only imperfectly taken into account for the
computation of the official national poverty line. In our estimations we corrected these biases as
most as possible and estimate that poverty as measured by the headcount index increased
strongly between 1994 and 1998 from 55.5% to 61.8% but then decreased substantively between
1998 and 2003 to 47.2%. In rural areas we find roughly the same dynamic only on a higher level.
Although through out all three survey years poverty in urban areas remained always significantly
lower than in rural areas, we state that urban poverty rose from 14.7% in 1994 to 27.3% in 1998
and then decreased to 20.3% in 2003. Therefore, in contrast to rural areas and despite the fact
that it decreased significantly between 1998 and 2003, urban poverty in 2003 was still
substantially higher than in 1994.
Between 1994 and 1998, inequality as measured by the Gini coefficient increased from 0.45 to
0.50 in urban areas, but decreased significantly in rural areas from 0.39 to 0.35 and on a national
level from 0.47 to 0.45. Thereafter between 1998 and 2003, inequality stagnated more or less in
urban areas, increased again to 0.39 in rural areas but remained constant on a national level. To
conclude, growth between 1994 and 2003, as measured by the growth-elasticity of poverty as
well as by the pro-poor growth index, was moderately pro-poor on the national level and in rural
areas but not so in urban areas. The growth and inequality decomposition of poverty further
revealed that even the only slight decrease of national inequality over the whole observation
period contributed substantially to poverty reduction.

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