Does economic growth automatically reduce poverty, Business Economics

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Does economic growth automatically reduce poverty?

Growth implies more goods and services are obtainable to satisfy more wants and requirements. But the benefits of growth may flow to a few ruling elite. Shortly, the impact of growth depends onto how extensively and fairly income is distributed. Real growth is essential, but not adequate for poverty reduction

Many economists advocate the trickledown theory. There the initial benefits of growth go the wealthy, but ultimately trickle down to the poor for example rich families buy local produce and use servants, many more

Implications Government can intervene to decrease poverty by transfer payments and progressive taxation giving public and merit goods and services free/below cost. This expenditure may beyond the resources of Less Developed Country governments.


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