Pro-poor growth in Argentina and Brazil: Combining macroeconomic policymaking and pro-poor initiatives

Abstract

This project has the following problem statement: "To what degree can the more successful reduction of poverty and inequality in Brazil compared to Argentina be explained by Brazil pursuing active policies of redistribution of income and pro-poor growth strategies, or by better use of macroeconomic policy instruments?" First, the development debate and the issue of pro-poor growth are examined. Second, Brazil and Argentina are studied individually in terms of which macroeconomic policy they conducted, and what effect this had on the poor. Thirdly, the findings are compared to the broader debate between orthodox (IMF) and heterodox (Joseph Stiglitz) economists, as to determine which policy is most effective for a pro-poor growth. To a large extent we confirm Stiglitz arguments, and conclude that pragmatic, selective macroeconomic policymaking combined with pro-poor initiatives is the most efficient method for acheiving pro-poor growth.