This paper examines the relationship between growth and poverty in Iran during the first five-year plan. In other words, effort has been made to show whether economic growth in Iran helped poor people or not. For this purpose the concept of pro poor growth has been analyzed with application to the economy of Iran, both in urban and rural areas and in the country as a whole. We use an indicator of pro poor growth in order to determine the degree to which poor people benefited or lost from the economic growth in Iran.
The results indicate that during the period of 1988-93, the extent of poverty declined in Iran. The decomposition of changes in poverty into ‘pure growth effect’ and ‘pure inequality effect’ showed that the former effect is negative and the latter is positive both i n urban a nd rural areas a rid in the country a s a whole. Pro poor growth index measured by poverty indices as headcount ratio, poverty gap ratio, and Foster-Greer-Thorbecke index shows that economic growth both in urban and rural areas and in the country of Iran is pro poor. Thus, according to findings in this paper, economic growth helps the poor people.