The emergence of mega-regions, as metropolitan areas merge to form a system of cities, has demonstrably contributed to growth in the developed countries. With South Asia experiencing one of the highest urbanization rates, connecting cities presents opportunity to mobilize people, goods and services, and develop supply chains over larger spatial areas. However, this also implies unraveling overlapping commuting patterns, economic linkages, social networks, multiple jurisdictional boundaries- which add to the complexity of decision-making for policymakers and practitioners.
The proportion of people living below the poverty line in Bangladesh has fallen sharply from close to 60% in 1990 to 40% in 2005. Using the Household Income and Expenditure Survey conducted by the Bangladesh Bureau of Statistics; economists Aphichoke Kotikula, Ambar Narayan and Hassan Zaman find that the number of poor people in Bangladesh fell by nearly 6 million between 1990 and 2005. The study, “To what Extent are Bangladesh’s Recent Gains in Poverty Reduction Different from the Past?” also shows substantial improvements in living conditions. For instance, the percentage of households with connections to electricity increased from 31% to 44% between 2000 and 2005.
Key factors contributing to poverty reduction include changes in certain household characteristics – most prominently, a smaller number of dependents and improvements in their education.
Last week, I discussed the two very different South Asias and the need for regional cooperation to bring the lagging regions up to the standards of thriving regions. However, increased market integration by itself will not be sufficient to accelerate growth and benefit the lagging regions. South Asia suffers from a massive infrastructure deficit. Infrastructure is like second-nature geography, which can reduce the time and monetary costs to reach markets and thus overcome the limitations of physical geography.
Improved infrastructure that enhances connectivity and contributes to market integration is the best solution to promoting growth as well addressing rising inequality between regions. The Ganga Bridge in Bihar in India is a good example of second-nature geography. The bridge has reduced the time and monetary costs of farmers in the rural areas in north Bihar to reach markets in Patna, the largest city in Bihar. The Jamuna Bridge in Bangladesh is another good example of spatially connective infrastructure. The bridge has opened market access for producers in the lagging Northwest areas around the Rajshahi division. Better market access has helped farmers diversify into high value crops and reduced input prices.
South Asia suffers from three infrastructure deficits. First, there is a service deficit, as the region’s infrastructure has not been able to keep pace with a growing economy and population.