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South Asia: can poverty be eliminated?

Ignacio Hernandez's picture

It can be done, according to the report Economic Growth in South Asia, recently published by the World Bank. If growth accelerates to 10%, poverty could go down by two thirds and reach single-digit rates by 2015.

 


Poverty South Asia

 

In the words of Shantayanan Devarajan, World Bank Chief Economist for the region and co-author of the report:

 

South Asia's decade-long economic expansion has raised the possibility that the sub-continent could eliminate poverty in our lifetime. But to realize this dream, South Asians must create the conditions and incentives necessary to sustain and accelerate growth that benefits all. The economic well-being of several hundred millions of people depends on it.

 

Poverty reduction has already been significant in the past decade, thanks to sustained economic growth. Ijaz Nabi, the report’s co-author:

 

Across the board, poverty has come down by six, seven, eight percentage points, as a result of this decade long growth rate. The one country in the region that did not experience a reduction in poverty was Pakistan, because Pakistan’s growth rate virtually stalled in that decade. But there too, growth has now picked up and the most recent data from Pakistan show a substantial reduction in poverty.

 

Of course, to fulfill this optimistic forecast, big challenges need to be addressed:

 

A closer look at the evidence suggests that much remains to be done to achieve these accelerated growth rates. First, economic growth in the past decade has resulted in growing income inequality which may act as a constraint to higher growth. Second, while conflict, corruption and high fiscal deficits may not have constrained growth in the past, their persistence may become binding in the future. Third, a comparison with East Asia--a region that has sustained 7-10 percent growth rates--shows that South Asia's export-orientation, inflows of foreign direct investment, workers’ skill levels, infrastructure and ease of doing business are also substantially less advanced than East Asia's. South Asia’s savings, investment and productivity are also lower. These challenges suggest a set of policy choices for South Asian countries aimed at increasing investment and productivity, and the quality of labor, while addressing the problem of lagging regions and poor service delivery. Finally, the least integrated region in the world, South Asia can benefit from regional cooperation in trade, water and energy, among other things.

 

Related:

Much more available at the report's website, including interviews with the authors and abundant data.

Comments

Submitted by Nykoel on
The idea of reducing poverty to single-digit percentages in less than a decade sounds amazing. However, maintaining a level of growth as high as 10% for that long - is that even possible?

According to data from the world bank itself, average annual growth rates in countries across the board is between 3.2 and 4.2 percent.(http://www.worldbank.org/depweb/english/beyond/beyondco/beg_04.pdf) This study is saying that we not only need to maintain these figures but we need to double them, and keep them that high for almost a decade to reduce poverty - and probably longer than that in order to keep poverty at a lower level until the proper societal structures and domestic infrastruture can be developed to maintain a lower poverty level. I feel that the results of this study are not only optimistic, but are a pipe dream.

Poverty reduction is obviously possible, and this study is valueable because it shows a method by which this could be attained. But there is no way that it will happen throughout this entire region by 2015. We should use this study to form a more reasonable longer term strategy for poverty reduction that would be more feasible and more self-sustaining.

Submitted by Carlos R. Centeno on
Indeed, it isn't probable that countries like Guatemala will reach MDG 1 by 2015 if the government and the World Bank concentrate on economic growth increase. If you look at "Meeting the Millennium Poverty Reduction Targets in Latin America and the Caribbean 2002" in http://www.undp.org/rblac/documents/poverty/mdg/MDGs-libro70.pdf you will note that a plausible strategy is reducing the inequality gap as measured by the Gini coefficient. Sometimes reducing the inequality gap can lead to an increase in economic growth but the main idea is that by reducing the inequality gap in Guatemala, for example, for the next 10 years with a consistent 5%, the country would only need a 2% economic annual growth, which it is in fact achieving. I have yet to read a report that explains how to achieve the reduction of inequality but the method is promising.

Submitted by Guna Raj Pathak on
Dear sir, In my opinion,unless and until the resources are not provided accessible to the landless and propertyless people,and the products of LDC countries made marketeable by developed countries the poverty reduction programms looks like a mere a show case representing the developed country to make fool vast poor world community.

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