Growth inequality and poverty in Madagascar, 2001-2005

The paper examines the changes in poverty and inequality in Madagascar between the years 2001 and 2005. The analysis is based on household-level survey data from the Enquete Permanente Aupres des Menages, which are matched to community-level census data from the Recensement des Communes. After describing the changes in the poverty profile, the paper explores the driving factors behind poverty changes. We find that there exist large disparities in poverty rates between urban and rural areas, as well as across provinces. Regression results show that these disparities persist even after controlling for a wide selection of socio-economic and demographic household characteristics. We identify three factors that are key in explaining the provincial variation in poverty rates: (i) the provincial endowments of infrastructures, (ii) the structure of the agricultural sector, and (iii) (to a lesser extent) climatic factors. Finally, the paper estimates poverty in 2007 to remain largely at the same level as (and of the same structure) in 2005.