Sectoral growth and poverty reduction: evidence from Sudan’s economy

This paper examines how sectoral output growth has influenced poverty reduction in Sudan over the period 1970–2022. In particular, the study aims to assess how value-added growth in agriculture, industry, and services affects poverty outcomes, measured by the headcount ratio, poverty gap, and severity index. Methodologically, the analysis constructs annual monetary poverty indices using the Foster–Greer–Thorbecke (FGT) approach, based on a lognormal distribution derived from per capita consumption and Gini coefficients. An Autoregressive Distributed Lag (ARDL) model is then estimated to capture both short- and long-run effects of sectoral value-added growth on these poverty indices, alongside key macroeconomic and demographic variables, including education, exports, inflation, population, credit access, and GDP growth. The results indicate that growth in agriculture and industry significantly reduces FGT poverty indices in the long run, whereas the services sector exerts statistically insignificant effects. Education, access to credit, and higher inflation are associated with lower poverty indices, while population growth increases poverty, and export expansion is linked to higher poverty, reflecting the enclave nature of Sudan’s extractive export sectors. Overall, the findings underscore that inclusive economic expansion—centered on revitalizing agriculture, fostering industrial development, and reorienting services—together with complementary policies in human capital, finance, and macroeconomic management, is essential for sustainable poverty reduction in Sudan. The study provides new empirical evidence to inform policymakers in Sudan and other conflict-affected low-income economies undergoing economic transition.