In the last two decades, across a rangeof countries high growth rates have reduced poverty but havebeen accompanied by rising inequality. This paper ismotivated by this stylized fact, and by the strongdistributional concerns that persist among populations andpolicy makers alike, despite the poverty reduction observedin official statistics where growth has been sufficientlyhigh. This seeming disconnects frames the questions posed inthis paper. Why the disconnect, and what to do about it? Itis argued that official poverty statistics may be missingkey elements of the ground level reality of distributionalevolution, of which rising inequality may be an indirectindicator. Heterogeneity of population means that there maybe significant numbers of poor losers from technical change,economic reform and global integration, even when overallmeasured poverty falls. In terms of actions, attention isdrawn to the role of safety nets as generalized compensationmechanisms, to address the ethical and political economydimensions of such a pattern of distributional evolution.Addressing structural inequalities is also a long termanswer with payoffs in terms of equitable growth. In termsof future analysis, diminishing returns have set in to theinequality-growth cross-country regressions literature.Further work to help policy makers should focus on: (i) newinformation to illuminate the disconnect; (ii) analysis andassessment of safety nets as generalized compensationmechanisms; and (iii) addressing specific forms ofstructural inequality related to assets, gender, and socialgroupings like caste or ethnicity.
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