There is some research that describes the positive impact that economic development can have on poverty reduction. However, other studies have found that economic growth is less effective in countries that have more income inequality (Agyemang, 2015). This demonstrates how some strategies for economic growth do not benefit low-income populations and can even increase income inequality. A study by G.S. Fields (1980) examined three strategies for economic growth: modern-sector enlargement growth, modern sector enrichment growth and traditional sector enrichment growth, in their relation to improving or worsening income inequality and poverty. Modern-sector enlargement growth and traditional sector enrichment growth were found to lower income inequality while modern sector enrichment growth made it worse.
Eric Agmeyang (2015) explains that “the prospect for alleviating absolute poverty therefore depends on the rate of sustained economic growth and how its benefits are distributed in the society.” Effective economic development must therefore address income inequality and ensure that low income populations are benefiting directly from the economic growth.
https://d3n8a8pro7vhmx.cloudfront.net/broadbent/pages/4483/attachments/original/1438883643/towards_a_more_equal_canada.pdf?1438883643">Towards A More Equal Canada: A Report on Canada’s Economic and Social Inequality