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Expand exports to resolve the South Asian paradox

Hartwig Schafer's picture
South Asia has grown strongly to reduce poverty and create jobs, but the region remains a development paradox


South Asia has grown strongly to reduce poverty and create jobs, but the region remains a development paradox: Despite strong growth job creation remains weak and is often of poor quality.

Sri Lanka grew at an average rate of 5.8 percent from 2010-2017 but the growth of new job opportunities is below what many had hoped for. Most Sri Lankans still lack a regular job in the formal economy, and huge differences in pay among workers exist.

Meanwhile, trade in goods as a share of the economy is much lower than in other regions. The trends in Sri Lanka and much of South Asia differ from other regions, where trade, growth and jobs are directly connected and go hand in hand. This South Asian paradox raises the question of how governments can boost job growth, and how to raise the quality of new jobs so that economic development brings more shared prosperity.

A new report by the World Bank and the International Labour Organization (ILO) finds that increasing exports has the potential to contribute to a broader strategy for promoting growth, job creation and shared prosperity.

Titled “Exports to Jobs: Realizing the Gains from Trade,” the report shows how higher exports can translate into benefits for workers across the country, and it therefore recommends policies to expand exports together with policies that help sharing these benefits more widely, for example through measures that help workers get the skills needed to compete for new formal-sector jobs.