The story of growth and poverty reduction is much debated in an ever changing world. The challenge in the 1960s was how to lift low-income countries from a low-growth trap to a reasonably high-growth path. Fifty years later, many fast-growing economies have emerged, but more than a hundred countries have been unable to move away from low-growth and high-poverty traps.

Between 1960 and 2010, three major shifts impacted how we think about growth and poverty. These big shifts were from: state-directed command economies to more market-driven approaches; structural issues of deregulation, liberalization and privatization to sectoral sources of growth, particularly agriculture and financial services; and macroeconomic to microeconomic (and now macro-micro) approaches to growth.

With these shifts came a recognition that poverty reduction is a goal in itself and need not depend on how fast or slow a country is growing. The new wave of globalization that swept the world during the past two decades has aided growth and poverty reduction in the developing world. However, the ongoing global economic crisis threatens to undo those gains.

This World Bank E-Institute course will provide a detailed explanation of the role economic policies have on growth and poverty reduction in developing countries.  Specifically, after describing basic economic relationships—and after confirming that growth is the most critical factor in alleviating poverty—the course turns to individual policy areas. These include the various roles of government, which include maintaining an environment conducive to the effective operation of a market economy and conducting fiscal policy.

Policies governing money supply, exchange rates and the financial sector are also covered. After describing the experience over the past several decades with development aid, which aims to place poor countries on a path to sustainable long-term growth, the course turns to a discussion of external debt and how it became unsustainable in many low-income countries, crippling growth potential and keeping millions in poverty. The remainder of the course examines problems that can prevent the poor from moving out of poverty.

Course Theme: Growth and Competitiveness

Target Audience:  Policy makers, academics, representatives of donor agencies and civil society organization, students of development economics.

Contact name:  Vasumathi L Rollakanty

Web site:  www.worldbank.org