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Finishing the job of ending poverty in South Asia

Hartwig Schafer's picture
This Bangladeshi woman was born in poverty. With the right kind of education, life in poverty quickly became a story from the past for her. Credit: World Bank

"I have a four-year-old son back in my village. I want to make a better life for him,” says Sharmin Akhtar, a 19-year-old employee in one of Dhaka’s many flourishing garment factories.

Like thousands of other poor women, Sharmin came down to Bangladesh’s capital from her village in the country’s north to seek a better job and create a more prosperous future for her family—leaving behind a life of crushing poverty.

Today, as we mark End Poverty Day 2018, it’s important to note that Sharmin’s heartening story is one of many in Bangladesh and the rest of South Asia, where economic growth has spurred a dramatic decline in extreme poverty in the last 25 years.

And the numbers are striking: In South Asia, the number of extreme poor living on less than $1.90 a day dropped to 216 million people in 2015 from 275 million in 2013 and 536 million in 1990.

Even more remarkable, South Asian countries experienced an increase in incomes among the poorest 40 percent of 2.6 percent a year between 2010-2015, faster than the global average of 1.9 percent.

On a global scale, the highest concentration of poor shifted from South Asia to Sub-Saharan Africa in 2012. And India is likely to be overtaken, if it has not already been, by Nigeria as the country with the most people living in extreme poverty.

It’s worth thinking about how far South Asia has come – but remaining clear-eyed about how far we must go to finish the fight against extreme poverty.

Indeed, it is increasingly clear that poverty is more entrenched and harder to root out in certain areas, particularly in rural areas and in countries burdened by violent conflict and weak institutions.

Estimates for 2015 indicate that India, with 176 million poor people, continued to have the highest number of people in poverty and accounted for nearly a quarter of the global poor.

True, the extreme poverty rate is significantly lower in India relative to the average rate in Sub-Saharan Africa. But because of its large population, India’s total number of poor is still large.

And while there has been a substantial decline in the numbers and rate of people living below $1.90 in South Asia, the number of people living on less than $3.20 has declined by only 8 percent over 1990-2015 because of the growing population.

In 2015, 49 percent of the population of South Asia were living on less than $3.20 a day, and 80 percent were living on less than $5.50 a day.

Investing in people of South Asia for prosperity and quality of life

Hartwig Schafer's picture
A little girl in Balochistan, Pakistan, who now receives a quality education thanks to World Bank support. 
A little girl in Balochistan, Pakistan, who now receives a quality education thanks to World Bank support. Credit: World Bank 

Human capital – the potential of individuals – is going to be the most important long-term investment any country can make for its people’s future prosperity and quality of life.

Just look around the world: Technology is reshaping every industry and setting new demands for skills in every profession. The frontier for skills is moving faster than ever before.

To meet that challenge and be able to compete in the global economy, countries need to prepare their workforces now for the tremendous challenges and opportunities driven by technological change.  

To that end, the World Bank will launch next week its highly anticipated Human Capital Index to measure countries’ contribution of health and education to the productivity of the next generation of their workers.

The Index will be released on October 11 at the Bank’s Annual Meetings in Bali as part of the Human Capital Project, a global effort led by the Bank to accelerate investments in people for greater equity and economic growth.

No doubt, any country ranking gets high visibility and, sometimes, meets controversy. But I hope it triggers a dialogue about policies to promote investments in people.

To be clear, the important purpose of the Human Capital Index is to measure the distance of each country to the highest standard of complete education and full health—or the “frontier”.

The index, irrespective of whether it is high or low, is not an indication of a country’s current policies or initiatives, but rather reflects where it has emerged over years and decades.

Put simply, the index measures what the productivity of a generation is, compared to what it could be, if they had benefitted from complete education and good health.

The index ranges from 0 to 1 and takes the highest value of 1 only if a child born today can expect to achieve full health (defined as no stunting and survival up to at least age 60) and complete her education potential (defined as 14 years of high-quality school by age 18).

Building up Bhutan’s resilience to disasters and climate change

Dechen Tshering's picture
Building Bhutans Resilience
Despite progress, Bhutan still has ways to go to understand and adapt to the impacts of climate change. And with the effects of climate change intensifying, the frequency of significant hydro-meteorological hazards are expected to increase. Photo Credit: Zachary Collier


The 2016 monsoon was much heavier than usual affecting almost all of Bhutan, especially in the south.
 
Landslides damaged most of the country’s major highways and smaller roads. Bridges were washed away, isolating communities.
 
The Phuentsholing -Thimphu highway which carries food and fuel from India to half of Bhutan was hit in several locations, and the Kamji bridge partially collapsed, setting residents of the capital city and nearby districts into panic for fear of food and fuel shortages.
 
Overall the floods drove down Bhutan’s gross domestic product by 0.36 percent.

While not as destructive as the 2016 monsoon, flash floods, and landslides are becoming a yearly occurrence along Bhutan’s roads.

Announcing the winners of the 2018 #OneSouthAsia Photo Contest

World Bank South Asia's picture


Home to Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, South Asia is one of the world’s most dynamic regions.

It's also one of the least integrated.

A few numbers say it all: Intra-regional trade accounts for only 5 percent of South Asia’s total trade; Intra-regional investment is smaller than 1 percent of overall investment.

South Asia’s transport corridors can lead to prosperity

Martin Melecky's picture
 World Bank
Transport corridors offer enormous potential to boost South Asia’s economies, reduce poverty, and spur more and better jobs for local people, provided the new trade routes generate growth for all and limit their environmental impact. Credit: World Bank

This blog is based on the report The Web of Transport Corridors in South Asia -- jointly produced with the Asian Development Bank, the United Kingdom’s Department for International Development, and the Japan International Cooperation Agency

No doubt, South Asia’s prosperity was built along its trade routes.

One of the oldest, the Grand Trunk Road from the Mughal era still connects East and West and in the 17th century made Delhi, Kabul and Lahore wealthy cities with impressive civic buildings, monuments, and gardens.

Fast forward a few centuries and today, South Asia abounds with new proposals to build a vast network of transport corridors.
 
In India alone—and likely bolstered by the successful completion of the Golden Quadrilateral (GQ) highway system—several transport proposals extending beyond India’s borders are now under consideration. 
 
They include the International North-South Transport Corridor (INSTC), linking India, Iran and Russia, the Asia-Africa Growth Corridor, and the Bangladesh, China, India, and Myanmar (BCIM) economic corridor.
 
The hope is that these transport corridors will turn into growth engines and create large economic surpluses that can spread throughout the economy and society.

Arguably, the transport corridor with the greatest economic potential is the surface link between Shanghai and Mumbai.
 
These two cities are the economic hubs of China and India respectively, two emerging global powers.
 
The distance between them, about 5,000 kilometers, is not much greater than the distance between New York and Los Angeles.
 
But instead of crossing a relatively empty continent, a corridor from Shanghai to Mumbai—via Kunming, Mandalay, Dhaka, and Kolkata—would go through some of the most densely populated and most dynamic areas in the world, stoking hopes of large economic spillovers along its alignment.
 
“Build and they will come” seems to be the logic underlying many massive transport investments around the world.
 
However, the reality is that not all these investments will generate the expected returns.
 
Worse, they can become wasteful white elephants—that is, transport infrastructure without much traffic—that would cost trillions of dollars at taxpayers’ expense.
 
So, how can South Asia develop transport corridors that have a positive impact on their economies and benefit all people along the corridor alignments and beyond?  
 
First, countries need to change the mindset that transport corridors are mere engineering feats designed to move along vehicles and commodities.
 
Second, sound economic analysis of how corridors can help spur urbanization and create local jobs while minimizing the disruptions to the natural environment, is key to developing successful investment programs.
 
Specifically, it is vital to ensure that local populations whose lives are disrupted by new infrastructure can reap equally the benefits from better transport connectivity.
 
The hard truth is that the development of corridor initiatives may involve difficult tradeoffs.
 
For instance, more educated and skilled people can migrate to obtain better jobs in growing urban areas that are benefiting from corridor connectivity, while unskilled workers may be left behind in depopulated rural areas with few economic prospects.
 
But while corridors can create both winners and losers, well-designed investment programs can alleviate potential adverse impacts and help local people share the benefits more widely.
 
In that vein, India’s Golden Quadrilateral, or GQ highway system, is a cautionary tale. 
 
No doubt, this corridor had a positive impact. 
 
Economic activity along the corridor increased and people, especially women, found better job opportunities beyond traditional farming.
 
But this success came at a cost as air pollution increased in the districts near the highway.
 
This is a major tradeoff and one that was documented before in Japan when levels of air pollution spiked during the development of its Pacific Ocean Belt several decades ago.
 
Another downside is that the economic benefits generated by the GQ highway were distributed unequally in neighboring communities.  

Has Bhutan’s growth been jobless?

Tenzin Lhaden's picture
Bhutan's youth unemployment rate has increased from 10.7 percent in 2015 to 13.2 percent in 2016
Bhutan continues to maintain solid growth and macroeconomic stability but job creation is lagging; its  youth unemployment rate has increased from 10.7 percent in 2015 to 13.2 percent in 2016. This indicates that high growth has not been able to generate enough jobs for youth. 

“The main driver of growth in Bhutan continues to be the hydropower sector, but electricity generation does not create job,” said a senior government officials attending the presentation of The World Bank’s South Asia Focus on Jobless Growth on June 28th in Thimphu. The report was presented by Martin Rama, World Bank South Asia Region Chief Economist and was attended by senior government officials, parliamentarians and development partners. The presentation alongside the launch of Bhutan Development Update was a great opportunity for the policy makers to better understand and synthesize Bhutan and the South Asia region’s development opportunities.

In the case of Bhutan, it seems clear that growth alone will not allow it to attain higher employment rates as enjoyed by some other developing countries.

"More than 1.8 million young people will reach working age every month in South Asia through 2025 and the good news is that economic growth is creating jobs in the region,” said Martin Rama,. “But providing opportunities to these young entrants while attracting more women into the labor market will require generating even more jobs for every point of economic growth.”

The report informs that the fall in employment rates has been much faster in the region particularly in India, Bhutan and Sri Lanka and especially for women, risking foregoing the demographic dividend. While it is evident that the number of working age people is increasing, the proporation who are at work has declined owing to prioritization of the households to education, health and other commitments with increasing level of income.

How to boost female employment in South Asia

Martin Rama's picture
What's driving female employment in South Asia to decrease


South Asia is booming. In 2018, GDP growth for the region as a whole is expected to accelerate to 6.9 percent, making it the fastest growing region in the world. However, fast GDP growth has not translated into fast employment growth. In fact, employment rates have declined across the region, with women accounting for most of this decline.

Between 2005 and 2015, female employment rates declined by 5 percent per year in India, 3 percent per year in Bhutan, and 1 percent per year in Sri Lanka. While it is not surprising for female employment rates to decline with economic growth and then increase, in what is commonly known as the U-shaped female labor force function (a term coined by Claudia Goldin in 1995), the trends observed in South Asia stand out. Not only has female employment declined much more than could have been anticipated, it is likely to decline further as countries such as India continue to grow and urbanize.

The unusual trend for female employment rates in South Asia is clear from Figure 1. While male employment rates in South Asia are in line with those of other countries at the same income level, female employment rates are well below.
From the South Asia Economic Focus
Source: South Asia Economic Focus (Spring 2018).

If women are choosing to exit the labor force as family incomes rise, should policymakers worry? There are at least three reasons why the drop in female employment rates may have important social costs. First, household choices may not necessarily match women’s preferences. Those preferences reflect the influence of ideas and norms about what is women’s work and men’s work as well as other gendered notions such as the idea that women should take care of the children and housework. Second, when women control a greater share of household incomes, children are healthier and do better in school. Third, when women work for pay, they have a greater voice in their households, in their communities, and in society. The economic gains from women participating equally in the labor market are sizable: A recent study estimated that the overall gain in GDP to South Asia from closing gender gaps in employment and entrepreneurship would be close to 25 percent.

It’s time to end malnutrition in South Asia

Idah Z. Pswarayi-Riddihough's picture
Chronic malnutrition remains prevalent across the region as many poor South Asians cannot afford nutritious foods or don’t have the relevant information or education to make smart dietary choices.
Chronic malnutrition remains prevalent across South Asia as many poor South Asians cannot afford nutritious foods or don’t have the relevant information or education to make smart dietary choices.

In Sri Lanka, as in the rest of South Asia, improving agricultural production has long been a priority to achieve food security. 

But growing more crops has hardly lessened the plight of malnutrition. 

Chronic malnutrition remains prevalent across the region as many poor South Asians cannot afford nutritious foods or don’t have the relevant information or education to make smart dietary choices. 
And children and the poorest are particularly at risk.

South Asia is home to about 62 million of the world’s 155 million children considered as stunted-- or too short for their age. 

And more than half of the world’s 52 million children identified as wasted—or too thin for their height—live in South Asia. 

Moderate-to-severe stunting rates ranged from 17 percent in Sri Lanka in 2016 to a high 45 percent in Pakistan in 2012–13, with rates above 30 percent for most countries in the region.

Moderate-to-severe wasting rates ranged from 2 percent in Bhutan in 2015 to 21 percent in India in 2015–16, with rates above 10 percent for most countries in the region. 

The social and economic cost of malnutrition is substantial, linked to impaired cognitive development, chronic disease, and lower future earnings.

And sadly, much remains to be done to ensure children across South Asia can access the nutritious foods they need to live healthy lives. 

From Japan to Bhutan: Improving the resilience of cultural heritage sites

Barbara Minguez Garcia's picture
This page in: 日本語
 Barbara Minguez Garcia 2018
When it comes to their heritage buildings, both Bhutan and Japan have one common enemy: Fire. A view of Wangduephodrang Dzong in Bhutan which was destroyed by fire in 2012. Credit: Barbara Minguez Garcia 2018

About 2,749 miles, three countries, and a sea separate Kyoto, Japan, and Thimphu, Bhutan. The countries’ languages are different, and so are their histories.

But when it comes to their heritage buildings, both nations have one common enemy: Fire.

And to help prevent fire hazards, there’s a lot Bhutan can learn from Japan’s experience.

To that end, a Bhutanese delegation visited Tokyo and Kyoto last year to attend the Resilient Cultural Heritage and Tourism Technical Deep Dive to learn best practices on risk preparedness and mitigation, and apply them to Bhutan’s context.

Such knowledge is critical as Bhutan’s communities live in and around great heritage sites.

Helping Bhutan’s parliamentarians better understand economics

Yoichiro Ishihara's picture
Bhutanese Council Members and World Bank Staff
Bhutan's newly elected council members with World Bank staff. 

Members of parliament are valuable partners for the World Bank. They enact laws, shape and review development policies, and hold governments accountable for World Bank-financed programs. This applies for the landlocked Himalayan kingdom of  Bhutan. The role of its parliament has been increasing since the country’s successful transition from monarchy to constitutional monarchy in 2008. Through its engagement with these elected representatives, the World Bank effectively integrates citizen voice in its programs to achieve lasting and inclusive development results.
 
A joint workshop between the World Bank and National Council of Bhutan, the upper house, was a great opportunity for the World Bank to engage with the 25 newly elected National Council members.

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