The World has seen relatively high economic growth in the past two decades however the question that has been raised is, what has this growth delivered in terms of inequality and is it on the rise or decline for this matter? And whether this growth has benefited the poor in the developing world? According to Dollar and Kray (2001) economic growth generally benefits the poor, if this is the case then it should be both sufficient and necessary for poverty reduction.
Forsyth (2000) on the other hand argues, there is enough evidence that current patterns of economic growth and globalization are increasing income disparities which can in turn hinder the process of poverty reduction. When we look at the literature most of the anti-poverty programmes from major donor organizations focus on advocating broad based economic growth, other than tackling differences in income inequality (Adams, 2003). In order to see how much broad based growth can help reduce poverty it is vital to see to what extent economic growth is necessary. Some early proposals on the relationship between growth and poverty were dominated by Kuznets hypothesis (1955, 1963). The implications of this hypothesis are evident: if, in the early stages, economic growth leads to more inequality, then in the developing world it might take years for poverty to decline. Kuznets hypothesis was based on data derived from cross-sectional data but if the goal is to understand how growth affects inequality what we need is time series data, which will indicate how inequality changes with in countries as they grow over time (Adams, 2003).
The empirical findings of Ravallion (1995) and Deininger and Squire (1996), and most the recent studies tend to reject Kuznets hypothesis.Based on all this and other historical evidence the question of relation between economic growth and inequality still remains ambiguous. Moving towards Sub Saharan Africa which is focus for this essay, the evidence shows that African GDP growth has been tremendous for the past two decades.