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Paradox of rich and poor in South Asia
By Ejaz Ghani |
November 5, 2010, Friday
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Print Edition
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SOUTH Asia presents a depressing paradox.
It is among the fastest growing regions in the world, but it is also home to the largest concentration of people living in debilitating poverty, conflict, and human misery.
While South Asia is far more developed than Sub-Saharan Africa, and India (the largest country in the region) has achieved lower middle-income status, South Asia has many more poor people than Sub-Saharan Africa.
This raises the big question of whether the best escape from poverty comes from general economic growth or from a direct attack on poverty.
The answer depends on where one looks.
Stupendous growth hides deep pockets of poverty. For the countries of South Asia, poverty has morphed from a national to a sub-national problem.
Although economic growth has reduced South Asia's poverty rate, it has not fallen fast enough to reduce the total number of poor people.
The number of people living on less than US$1.25 a day increased from 549 million in 1981 to 595 million in 2005.
In India, which accounts for almost three-quarters of this population, the numbers increased from 420 million to 455 million during this period.
Besides the slow pace of poverty reduction, human development has not kept up with the pace of income growth, either.
There are more than 250 million children in South Asia who are undernourished, and more than 30 million children who do not go to school.
A lot of attention has been given to the "Shining Asia," while the "Suffering Asia" has been forgotten.
Rather than wait for a rising tide to lift all boats, policy makers should consider direct policy interventions to reduce poverty.
A direct attack on poverty can yield a double dividend: In reducing human misery, it could spark growth, thereby creating more political space for direct poverty reduction.
A high priority should be given to increasing pro-poor fiscal transfers. Achieving equity through fiscal transfers can ensure a level playing field.
But simply directing financial resources to lagging regions will not be enough to solve their problems.
Removing barriers to human mobility - such as labor laws, state-specific social-welfare programs, and housing-market distortions - should be an integral part of development.
Human mobility promotes growth and reduces poverty. It also empowers traditionally disadvantaged groups, particularly women.
Likewise, slow agricultural growth has constrained economic opportunities for the vast majority of poor people in lagging regions.
Policy makers should recast agriculture in the new environment of globalization, supply chains, and growing domestic demand.
The food-price crisis of two years ago served as a wake-up call, and has created an opportunity to revisit existing agricultural policies.
(The author is economic adviser on South Asia poverty reduction and economic management at the World Bank. Copyright: Project Syndicate, 2010.www.project-syndicate.org. Shanghai Daily condensed the article.)
It is among the fastest growing regions in the world, but it is also home to the largest concentration of people living in debilitating poverty, conflict, and human misery.
While South Asia is far more developed than Sub-Saharan Africa, and India (the largest country in the region) has achieved lower middle-income status, South Asia has many more poor people than Sub-Saharan Africa.
This raises the big question of whether the best escape from poverty comes from general economic growth or from a direct attack on poverty.
The answer depends on where one looks.
Stupendous growth hides deep pockets of poverty. For the countries of South Asia, poverty has morphed from a national to a sub-national problem.
Although economic growth has reduced South Asia's poverty rate, it has not fallen fast enough to reduce the total number of poor people.
The number of people living on less than US$1.25 a day increased from 549 million in 1981 to 595 million in 2005.
In India, which accounts for almost three-quarters of this population, the numbers increased from 420 million to 455 million during this period.
Besides the slow pace of poverty reduction, human development has not kept up with the pace of income growth, either.
There are more than 250 million children in South Asia who are undernourished, and more than 30 million children who do not go to school.
A lot of attention has been given to the "Shining Asia," while the "Suffering Asia" has been forgotten.
Rather than wait for a rising tide to lift all boats, policy makers should consider direct policy interventions to reduce poverty.
A direct attack on poverty can yield a double dividend: In reducing human misery, it could spark growth, thereby creating more political space for direct poverty reduction.
A high priority should be given to increasing pro-poor fiscal transfers. Achieving equity through fiscal transfers can ensure a level playing field.
But simply directing financial resources to lagging regions will not be enough to solve their problems.
Removing barriers to human mobility - such as labor laws, state-specific social-welfare programs, and housing-market distortions - should be an integral part of development.
Human mobility promotes growth and reduces poverty. It also empowers traditionally disadvantaged groups, particularly women.
Likewise, slow agricultural growth has constrained economic opportunities for the vast majority of poor people in lagging regions.
Policy makers should recast agriculture in the new environment of globalization, supply chains, and growing domestic demand.
The food-price crisis of two years ago served as a wake-up call, and has created an opportunity to revisit existing agricultural policies.
(The author is economic adviser on South Asia poverty reduction and economic management at the World Bank. Copyright: Project Syndicate, 2010.www.project-syndicate.org. Shanghai Daily condensed the article.)
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