The Relationship between Economic Growth, Income Distribution and Poverty in Iran\'s Rural Areas

Debate about relationship between economic growth, income distribution and poverty has been a fundamental issue in development economics. This complex interrelationship, which called growth–poverty–inequality (GPI) triangle, poses a challenge and dilemma to development strategists and policymakers. The objective of this study is to examine the inter-temporal link between growth, income distribution and poverty in rural region in Iran based on time- series data during 1985-2010. The generalized version of variance decomposition and impulse response analysis is operated in this study to test the temporal causality among poverty measures; growth measures and income inequality .Results show that, agricultural growth and national income significantly explain rural poverty variation. At the same time the inter link between national income and income distribution had been confirmed. Also, rural income distribution significantly explains by itself and agricultural growth and rural poverty could not explain it.

JEL Classification: Q1, I32, P25

Keywords:
Economic Growth, Rural Poverty, Income Inequity, GINI Coefficient