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Understanding the Sources of Spatial Disparity and Convergence: Evidence from Bangladesh

Forhad Shilpi's picture

The economic liberalization during the last couple of decades led to impressive economic growth and poverty reduction in many developing countries. This period has also witnessed worsening of income inequality and widening of spatial disparity (World Development Report (2009); Kanbur and Venables (2005); Kim (2008)). There is considerable worry among policy makers about the extent to which this rise in spatial inequality is due to increasing disparity in opportunities in terms of provision of basic infrastructure and services. The recent growth and poverty reduction experience places Bangladesh as an exception to this trend of increasing spatial inequality.  Bangladesh made significant strides in poverty reduction between 2000 and 2010 with incidence of poverty falling from 48.9 percent to 31.5 percent. During the same period, the incidence of poverty declined more than proportionately in traditionally poorer regions, reducing welfare gaps across regions. There is also no evidence of significant change in overall inequality over the same period. What made spatial disparity in Bangladesh to decline while its economic growth accelerated substantially? What were the sources of decline in spatial disparity in welfare?

Do Elected Councils Improve Governance? - Experimental Evidence from Afghanistan

Andrew Beath's picture

In the past decade, economists such as Daron Acemoglu, Abhijit Banerjee, Nathan Nunn, and James Robinson have empirically validated the primacy of ‘good’ institutions in driving beneficial political and economic outcomes. While this has been a great leap for academic economics, the applicability to policy is debatable. Specifically, as the empirical techniques employed generally exclude components of institutional variation that change over the short- to medium-run (see Rohini Pande and Christopher Udry), the respective findings potentially don't have much to say about what can be expected from deliberate attempts to generate 'good' institutions.

Serious empirical investigation of the effects of institutional reform remains scant, and for good reason. Rigorously identifying the effects of democratization – or any other specific reform – is extremely difficult, particularly at the national-level. When and where societies enact democratic reforms (such as in Eastern Europe in 1989), such reforms go part in parcel with sweeping changes in economic policy, institutional frameworks, and political actors (in the technical lexicon, such reforms are ‘endogenous’). This makes it almost impossible to isolate the effects of the reform itself from the effects of the multitude of other contemporaneous changes.

Friday roundup: US jobs, Arctic methane, Stiglitz on free trade, Summers-Yellen contest, politics in Zimbabwe and Telangana

LTD Editors's picture

The US administration hails a new jobs report, saying it provides further confirmation that economic recovery continues.

An alarming new report in Nature magazine on the costs of Arctic methane warns that the price tag for such emissions could approach the value of the global economy.

Collective action and community development: evidence from self-help groups in rural India

LTD Editors's picture

In response to the problems of high coordination costs among the poor, efforts are underway in many countries to organize the poor through "self-help groups" (SHGs) -- membership-based organizations that aim to promote social cohesion through a mixture of education, access to finance, and linkages to wider development programs.

Friday Roundup: New Working Papers on food prices, India rainfall insurance, mega farms and Brazil ethanol

LTD Editors's picture

Food price spikes, price insulation, and poverty
This paper looks into the impact of changes in restrictions on staple foods trade during the 2008 food price crisis on global food prices and also analyzes the impact of such insulating behavior on poverty in various developing countries and globally.

Securing Africa’s Land Rights

Klaus Deininger's picture

In a new book released Monday, the World Bank's Africa Region convincingly argued for "Securing Africa's Land for Shared Prosperity" by recording land rights for both individuals and groups. That’s mainly because at a time when vastly-increased commodity demand has led to a series of widely publicized “land grabs” and urban expansion, the potential benefits from securing rights have greatly increased in several ways.

First, equity and efficiency. Poor and traditionally disadvantaged people, including women, have the least access to land rights, so securing their rights can provide them with access to a key productive resource. Also, if land rights are secured, land users will be more likely to invest in land improvement and modern technology to improve the efficiency of land use.

Powering Up Developing Countries through Integration?

Emmanuelle Auriol's picture

The International Energy Agency (IEA) estimates that 1.3 billion people, mainly in Sub-Saharan Africa and in developing Asia, are without access to electricity. According to the IEA, an estimated $48 billion per year is needed to finance the volume of investment required to provide universal access to electricity by the year 2030. And this is a huge challenge, especially for the world's poorest nations.

President Obama on his recent Africa trip has hence announced a 7-billion project to increase electrical infrastructure. This is a much needed move as ,with scarce public resources, little assistance from the private sector, and limited aid, most of the developing these countries attempt to address their investment needs by creating regional power markets. Integrated power pools allow for the better use of existing infrastructures and realization of projects that would otherwise be oversized for an isolated country. For instance, the hydro potential of the Democratic Republic of Congo alone is estimated to be sufficient to provide three times the much power currently consumed in Africa. Large hydroelectric projects, such as the Grand Inga in the region of the Congo River and the projects for the Senegal River basin, could benefit all countries in the region. The challenging question, however, is how to finance and manage these projects.

The end of a long era

Branko Milanovic's picture

Is China, after a hiatus of 150 years, again the largest economy in the world? Not all sources of GDP data agree, but there is little doubt that China is either already now the largest economy, or it will, within a year, become so by overtaking that of the United States. Whichever the case may be, a long era when the American economy was the largest in the world and which began around 1860, is now reaching its end.

Data on gross domestic product (called now Gross Domestic Income) are available from three sources: the Maddison project, which is the only source for the long-run series of national GDPs, going back to 1820s; the World Bank or IMF annual data, going back to 1960; and Penn World Tables, produced periodically at the University of Pennsylvania, going back from their just-released version 8.0 to 1950 . All three sources produce GDP data in PPP (purchasing power parity) terms, which means that they adjust for differences in price levels between the countries. The easiest way to explain it is to say that PPPs try to account for each good and service using the same price for it around the world, so that a mobile phone, a kilo of rice and a haircut would each be valued the same in China as in the United States. Only thus can the real sizes of the economies, and the welfare of people, be truly comparable. These PPP data, in turn, are obtained through a massive worldwide project called the International Comparison Program, which is run every five to 10 years and collects more than 1,000 prices in all countries.

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