Essays on growth and absolute poverty : evidence from Uganda

Abstract

The thesis consists of three papers that deal with poverty in Uganda. The first paper evaluates whether economic growth alone is sufficient for absolute poverty reduction. Using cross-sectional household survey data from Uganda, the paper makes use of the poverty decomposition techniques to identify the main sources of absolute poverty changes. It was found that even in the midst of growth there are possibilities for the persistence of extreme poverty. The effect of growth on poverty reduction was lessened by worsening consumption inequality especially from 1997. Since the redistributive effect is non-negligible, there is a need for an investigation of factors affecting redistribution. This is what the second and third papers attempt to address. The second paper attempts to investigate the effect of the decentralised mechanism of community targeting on the households' wellbeing using micro-level data from Uganda. Developments in the theoretical literature pitting the efficiency advantages argument against that of local capture have brought the issue to the fore. Particular reference is made to the debate on the importance of contiguity and preference heterogeneity embedded in the Tiebout (1956) sorting versus the recent contribution by Bardhan and Mookherjee (2000) showing that decentralisation could have adverse effects through greater local capture. This is relevant to the debate about the decentralisation reforms going on across the Sub-Saharan Africa. This paper tests the implications of the empirical question, "Can decentralisation be a useful institutional reform to reduce the absolute poverty in less developed countries (LDCs), or might absolute poverty increase as political power shifts downwards due to greater capture of the programmes by local elites?" It was found that greater local capture, indeed, exacerbated extreme poverty, finding no support for strong efficiency advantages argument in Uganda. This might suggest that decentralisation reforms need to be carefully undertaken if they are to improve the economic wellbeing of households in countries faced with incomplete political markets and information flow constraints. theories by exploring these The third paper evaluates the causal effect of fertility on household welfare using panel data drawn from the Uganda household survey data for 1992/93 and 1999/00, exploring the Malthusian theory in a dynamic context. It was found that, on average, the households that experience a childbearing event have a lower real food consumption compared to the households that did not. This result suggests that high fertility rates can actually lower economic wellbeing and, therefore, are partly responsible for the persistence of extreme poverty in Uganda and many other LDCs with similar fertility trends.

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