Survey on the Relationship between Economic Growth, Poverty, and Inequality in Iran during Five-Year Development Plan

This study focuses on the relationship of poverty with economic growth and inequality during different socio-economic development programs in Iran between1989-2013. To this end, the elasticity of poverty was decomposed into growth and inequality effects; then the outcome of the economic growth is calculated using Kakwani and Son’s (2008) Poverty Equivalent Growth Rate index. This index demonstrates how the benefits of growth are distributed between the poor and the non-poor people. Study of the poverty equivalent growth rate can be an important tool for the governments to reduce poverty. Poverty changes decomposition to the neutral effects of the growth and inequality in rural and urban area shows that the effect of neutral growth on poverty is negative, whilst the neutral effect of inequality has positive and negative fluctuation. Iran’s economic and political evolvement during the years which our study focused on, can explain these fluctuations. Calculating Poverty Equivalent Growth Rate index and its comparison with the economic and social development programs in Iran, show that there were not any effective policies to achieve sustainable welfare.