Since the 1960’s the Asia Pacific region has seen sizeable advancements made in economic development and, consequently, a reduction of poverty. In contrast, many countries in the developing world, that once looked as if they were on a similar trajectory, have fallen behind. With a focus on government policies that drive strong economic outcomes for the private sector (from now on referred to as pro-growth policies), this report analyses the role pro-growth policies play in reducing poverty.

The report aims to answer the question; ‘Do policies that support the business sector also help the poor?’.  In doing so, the analysis revealed that countries that adopt pro-growth policies tend to have lower levels of poverty. The correlation can be attributed to job creation from the pro-growth policies, allowing for a stronger capability to alleviate poverty. In particular, the report finds that countries with policies promoting greater access to credit and the protection of minority investors have lower levels of poverty. Access to credit can assist in poverty alleviation by facilitating the entrance of businesses into the economy, allowing businesses to generate new employment opportunities, thus putting downward pressure on poverty.

Similarly, laws that protect investors are likely to boost investment, which can help decrease poverty by (i) increasing employment opportunities, (ii) providing new market opportunities for smallholders, (iii) increasing access to essential services.

The analysis is consistent with several policy recommendations, namely:

• Governments facilitate access to small or micro loans,
• Improve monetisation of remote areas,
• Continue financial literacy programs,
• Facilitate data collection efforts on credit information, repayments, as well as factors, are known to correlate with these outcomes,
• Enforce clear property rights, and
• Provide free legal advice to small investors.

Finally, the report emphasises the symbiotic relationship between numerous Sustainable Development Goals (SDGs) and the positive contribution pro-growth policies make towards poverty reduction, highlighting the importance of integrating the SDGs into government policies.

Pro-growth policies that promote greater access to credit and those that enforce protection of minority investors lead to lower levels of poverty; arguably, both activities help promote employment opportunities, which in turn help achieve progress toward SDG 1 (No poverty).

For access to credit to have its full potential, governments must also promote monetisation, which will help promote formal economic activity and help countries work toward SDG 9 (Industry, Innovation and Infrastructure).

Similarly, enforcing property rights is likely to boost investment, ensure that credit is utilised efficiently, and facilitate progress toward SDG 16 (Peace, Justice and Strong Institutions).

1. Policies that drive strong economic outcomes for the private sector have been an integral factor in poverty reduction as they tend to lead to job creation, which translates into more opportunities to get out of poverty. Pro-growth policies should be implemented in developing countries that are failing to reduce poverty. Pro-growth policies have a statistically stronger effect on poverty reduction in the Asia Pacific region than in other places.
2. Enabling further access to credit (through micro loans) can decrease poverty through several mechanisms, including an investment in education, managing risks, and absorbing financial shocks, particularly by facilitating the entrance or expansion of businesses into the economy. These new or larger businesses can generate new employment opportunities.
3. As there are many sectors within the developing world where barter dominates economic interactions, it is unlikely traditional loans would effectively alleviate poverty. Monetisation and the promotion of formal economic interactions would be beneficial in these instances.  
4. Clear and strong property rights play a vital role in strengthening local economies. In the absence of property rights, households may be unwilling or unable to make significant investments and use their property as collateral to obtain a loan. Moreover, firms will be apprehensive about taking out new loans in fear of expropriation. 
5. The protection of minority investors is crucial as it lowers the risk of misuse of corporate assets by directors for their personal gain, shareholder rights, governance safeguards and corporate transparency requirements. Laws that protect investors are likely to boost investment, which could help decrease poverty by increasing employment opportunities, providing new market opportunities for smallholders and improving access to essential services.
6. An overflow of access to credit can lead to an increased debt burden amongst some borrowers, which can have adverse consequences. Governments must regulate the credit industry to ensure that terms are fair and that debt levels are sustainable. Particularly, improving financial literacy and facilitating credit information for actuarial analyses will be important to ensure that the debt burden is not overwhelming. 
7. Corruption and poor governance leads to misappropriation and misuse of funds leading to education and health finance not going to where they are most needed. Many argue that in the absence of institutions that work against corruption and improve governance, these interventionist policies are unlikely to make much of a difference. That is, the broader political structure can also determine the efficacy of poverty reduction policies.
8. The report contributes to the literature on pro-growth policies and poverty and adds further insight in three ways. First, the analysis focused on a more extensive set of countries - 139 throughout 2005 to 2017. Second, the analysis used a more comprehensive list of policy levers to test what pro-growth reforms are more likely to drive poverty reduction. Third, the analysis tested for the Asia Pacific region's primacy in poverty reduction by studying whether a significant regional difference between this region and others arose.
9. The only finding that is inconsistent with the expectations generated by the literature review is related to trade. The analysis found evidence that suggests that trade and poverty are positively correlated. This result can be explained theoretically – trade inflows can potentially put downward pressure on wages through basic competition. As new and cheaper products enter an economy, producers of local substitutes can be displaced. Consequently, trade could be hurting employment opportunities for the poor disproportionately.
10. The analysis presented in this report used macroeconomic data from the World Bank to investigate whether policies that improve the ease of doing business also decrease poverty. Ease of doing business was captured by an index that includes information from surveys on business operators worldwide (see Appendix A for a complete explanation). The results suggest that countries where business practices are easier to facilitate tend to have lower levels of poverty.