Immiserizing Growth and Poverty Dynamics: An Assessment of Twelve Indian States

This chapter reconsiders the extent to which recent impressive growth performance in India has been associated with poverty reduction, using data collected by the Indian Human Development Surveys, a panel survey conducted in 2004/5 and 2010/11. The panel nature of the survey allows us to link income growth to poverty dynamics, and in particular to movements into and out of poverty as well as chronic poverty. While the overall story in India over this period is one of impressive poverty reduction, the data also reveal some cases of immiserizing growth. This chapter seeks to understand the nature and factors underlying immiserizing growth for the state of Chhattisgarh.

Immiserizing Growth: An Overview

This chapter provides a survey of theoretical and empirical issues related to immiserizing growth (IG). It reviews historical antecedents, including the towering figures of classical political economy—Malthus, Ricardo, and Marx—who held different versions of the IG idea. A number of the causal mechanisms generating IG outcomes are then reviewed, drawing on diverse traditions of scholarship, with a focus on political economy, politics, and the policy process. Finally, the empirical literature is examined drawing on cross-country and country case information. The chapter concludes that IG is not an insignificant empirical phenomenon, which has been somewhat overlooked in light of the prevailing narrative that ‘growth is good for the poor’.

The Paradox of Persistent Poverty Amid High Growth: The Case of Nigeria

The literature about the poverty and growth nexus maintains that economic growth possesses the capacity to reduce poverty, and empirical findings generally support this view. However, the situation in Nigeria runs counter to this position, giving high and persistent poverty in the face of growth. This chapter assesses the paradox of persistent poverty amid high growth in Nigeria. It compares growth and poverty trends, and presents growth elasticities of poverty. It also suggests a number of explanations for the paradox, including jobless growth, high and rising inequality, inadequate public expenditure on social services, poor governance and corruption, overconcentration on the oil sector, and environmental degradation. The study therefore recommends that critical attention should be paid to measures such as promoting good governance, increasing public expenditure on social services, and diversifying the economy from its overdependence on oil.

Richer but Not Happier: Four Areas of Reforms in the Next Phase of Development in China

Despite rapid economic growth, the proportion of people who report to be happy has declined and male adult mortality has increased in the past decade in China. This is a case of immiserizing growth—growth that comes with a lower level of welfare. We explore several potential causes of immiserizing growth: rising inequality, corruption, air pollution, and competitive pressure. Increasing marriage market competition due to a rise in the sex ratio imbalance seems to be a leading contributing factor. Facing intensive marriage market competition, parents with sons have to work harder and take more risks, which in turn diminishes happiness. The gain in utility as a result of additional income growth is not sufficient to offset the utility loss in the process of pursuing wealth

Political Settlements and Immiserizing Growth Episodes

Economic growth in developing countries is an ‘episodic’ phenomenon, with countries undertaking discrete shifts from periods of low to periods of high growth and vice versa. Not all growth acceleration episodes lead to reductions in poverty, and there is wide variation in the relationship between growth and poverty across episodes of growth of the same magnitude or duration. This chapter shows that several cases of growth acceleration episodes may be defined as episodes of immiserizing growth, in that poverty either increases or remains roughly the same across the duration of these episodes. Similarly, the chapter shows that not all growth deceleration episodes lead to increases in poverty. A political economy explanation is presented for episodes of immiserizing growth, focusing on the nature of the political settlement, and in particular on the distribution of power. We find that settlements with dispersed vertical power can lessen the likelihood of immiserizing growth episodes. We also find that dispersed horizontal power is not necessarily conducive to pro-poor growth episodes.

Introduction

This chapter provides context for the volume chapters. It addresses definitional and conceptual matters concerning growth, poverty, and the time frame and level of analysis. The distinction between ‘failed inclusion’ and ‘active exclusion’ is then presented to distinguish some of the underlying causal mechanisms. Next, the centrality of political economy and politics to the analysis of immiserizing growth (IG) is explained on the grounds that many of the causal mechanisms leading to IG are public policy measures or stand to be affected by them. The relationship of IG to poverty dynamics is then explored to determine if immiserizing growth is characterized by distinct types of transitory or chronic poverty.

Maria’s Paradox: Oil Extraction and the Misery of Missing Development Alternatives in the Ecuadorian Amazon

Why do some residents of the Ecuadorian Amazon support the expansion of oil extraction in their communities even when they believe that the impact of extractive industries on their communities and families has been negative, environmentally as well as economically? Building on nearly a decade of participatory research in the region, this chapter contextualizes this paradoxical choice within Ecuador’s encounter with oil extraction, which has not only failed to deliver the anticipated economic miracle but also resulted in a variety of immiserizing effects, be they economic, cultural, or ecological. Caught between the state whose functions are governed by an ‘extractive imperative’ and the oil sector whose presence is overwhelming, indigenous and peasant communities have not scored meaningful gains either by protesting against these dominant actors or by engaging with the much vaunted but ultimately ineffective concept of buen vivir (living well). The chapter argues that immiserization in this context is best understood as the absence of meaningful pathways to socio-economic development which force the eponymous Maria to choose intensified extraction despite the sector’s pervasive negative impacts on her family and community.

Is Structural Transformation-led Economic Growth Immiserizing or Inclusive? The Case of Indonesia

This chapter discusses the relationship between the recent pattern of structural transformation in the Indonesian economy and poverty reduction. In the past two decades, Indonesia has become a service-centred economy while its manufacturing sector has ceased to act as the driver of structural transformation. Further, the manufacturing sector’s capacity to generate employment and to lead productivity growth has deteriorated compared to that during the two decades prior to the Asian financial crisis. Since the late 1990s, Indonesia has also experienced a slowdown in poverty reduction and a rapid increase in inequality. This chapter argues that Indonesia’s economic growth will struggle to be as dynamic as that during the high-growth period if the service sector in its current form continues to lead structural transformation. This is because Indonesia’s service subsectors with large employment absorptive capacity have low productivity compared to the industrial subsectors. Without recovering dynamism in structural transformation, Indonesia’s fight against poverty and inequality is expected to be difficult.

Has the Economy Left the Children Behind? Nutritional Immiserization in India

In spite of rapid economic growth and recent progress in certain nutritional parameters, children in India continue to have among the worst anthropometric indicators in the world. This chapter constructs a hunger index for each state in India for 2006 and 2016 on the lines of the Global Hunger Index. It studies two of the component indicators of the index—child stunting and wasting—in relation to per capita state incomes. This shows a weakening relationship between the levels and growth rates of per capita incomes and the levels and changes in nutritional indicators since the late 1990s, particularly in the case of child wasting, which has worsened in absolute terms. With the qualifier that further nutritional progress is harder to attain at improved levels, these results indicate that economic growth has had a limited role in explaining the improvements in child anthropometry over the past two decades. Three explanations are assessed, all of which are found to be plausible. The experiences of certain states indicate the need for more committed interventions towards improving health and nutrition services.

Exploring the Causes of Immiserizing Growth: A Comparison of Pathways

Why do some countries experience long bouts of immiserizing growth? This chapter identifies and examines a handful of countries that over at least a five-year period experienced positive GDP growth rates of at least 2 per cent per year while simultaneously experiencing declines in the income of the bottom 20 per cent. Process tracing reveals that the diverse cases traversed three distinct causal pathways: structural reforms (Dominican Republic, 1984–9), structural transformation (Singapore 1978–83), and the systematic exclusion of indigenous populations from the benefits of growth (Bolivia 1991–7). The conclusions have implications for our understanding of the political causes of immiserizing growth, the role of the international system in causing such incidents, and how cases that otherwise might be perceived as successful included the systematic exclusion of vulnerable portions of the population.