Increasing Incomes for the Poor and Economic Growth: Toward a Simple Taxonomy for Policies

Abstract

Inspired by a suggestion from Anne Krueger, this paper explores the attraction and power of a simple two-by-two taxonomy for the analysis of policies as they relate to increasing incomes for the poor and economic growth. However, real-world complexities and serious policy assignment, estimation and measurement problems limit the overall utility of such simplified taxonomies. Nevertheless, useful policy insights, in particular contexts within certain markets and institutions, might be gleaned through the development of slightly more sophisticated taxonomies, as considered here in detail, that could apply continuous dimensions of poverty alleviation and increased efficiency. The author concludes that such scientific analyses will certainly raise important policy and research questions as to the choices made, their characterization, and why political economy processes do not lead to “better” policy choices in a particular context.