ABSTRACT
The preferred policy mix resulted from a simulation model of distribution and growth in which three alternative policy scenarios were considered: consumption transfers to the poor, wage restraint, and investment transfers to the poor. The policy that transferred investment assets to the poor proved superior to the other two, both in terms of growth and equity. In principle, policies aimed at both redistributing the existing stock of assets and investing in the creation of new productive assets can have both growth-augmenting and growth-reducing effects. Indeed, a relatively egalitarian redistribution of land assets may help to enhance the effectiveness of other policies designed to alleviate poverty. Implicit in the Redistribution with Growth (RWG) strategy is an egalitarian ethic that has as a goal the promotion of mutual interests rather than mere individual self-interests. Like the World Bank’s RWG strategy, however, the possibility of meeting basic needs was essentially linked to the necessity of generating genuine productivity increases among the poor.
