Guinea – Bissau: Selected Issues Paper, 2017 (chapter IV: Impact of Economic Structure and Policy on Poverty Incidence and Distribution)

Abstract

Political instability and conflict have held back inclusive economic growth in Guinea-Bissau. This chapter analyzes the incidence of poverty under alternative growth paths—the status quo versus a more diversified growth path with less dependence on cashew—based on the latest available light household survey. Diversification resulting merely from a redistribution of growth between occupational sectors is found to result in a slightly higher overall poverty rate, reflecting the current concentration of poverty in cashew-dependent rural areas. With a growth dividend, a diversified growth path reduces poverty unambiguously, with lower incidence and a more equal distribution. The results highlight the importance of reforms to improve aggregate productivity, as well as sectoral policies to protect the poor in the areas where they are concentrated.