Recent economic growth has led to impressive poverty reduction in South Asia during the past decade. Currently, growth is creating not just more resources but the potential to generate the political space for greater reform. On the one hand, it is breeding greater public demand for addressing urgent challenges; on the other, it gives politicians the opportunity to make tradeoffs through strategic prioritization. The report also argues that growth, and the need for even faster growth, is helping bring South Asia’s key problems to the fore, creating pressures to deal with them. This means South Asia faces an unprecedented opportunity: a chance of ending poverty in a generation.
If South Asian growth can be accelerated and sustained at 8% a year, income poverty will fall to single-digits in two decades. The task is difficult but not impossible given the unique opportunity that recent growth has created. The report uses the East Asian experience as a benchmark to assess the region’s potential to accelerate current growth rates. There is already evidence that current growth has made it possible for countries to pursue “second-generation” reforms, such as the privatization of public enterprises, deregulation of industries and financial sector reforms. India, for example, is reforming its value added tax system, which has already raised almost 2% of GDP in additional revenues.
Accompanying South Asia’s recent economic growth has been a rise in inequality. For instance, the richer, southern states of India are growing 3% faster than the poorer, more populous northern states. South Asians can bridge the gap among regions, sectors, and people with coherent policies that transmit economic and job growth to lagging regions, improve service delivery in health, education, and infrastructure, and protect the vulnerable. Programs targeting the poor are analyzed to offer recommendations for the way forward.
South Asia also has some of the worst levels of human deprivation on the planet. Pakistan, for example, has enjoyed 6% annual GDP growth since 2002, but one in 10 children still dies before his 5th birthday. In service delivery, countries are responding to the growing pressures for better education, health, and infrastructure by experimenting with new approaches such as vouchers, conditional cash transfers, contracting out, and benchmarking. Bangladesh and, more recently Pakistan, have been contracting out health services to NGOs. While most of these programs have yet to be rigorously evaluated, preliminary results are encouraging.
Bangladesh ranks at the bottom of Transparency International’s index of perceived corruption, but has grown at over 5% a year for the last 15 years. How to explain the conundrum of Bangladesh’s strong growth and human development performance despite its weak indicators of governance? An analysis of Bangladesh’s strengths and weaknesses offers lessons for other countries. Separately, evidence is presented to suggest more informed domestic public debate about what works and what doesn’t combined with global experience is emerging as an important force for change in South Asia.
Author Shekhar Shah's interview with Voice of America, May 3, 2007Article
Economic Growth is Creating "Political Space" for Deeper Reforms in South Asia: World Bank Report
Transcript of the Press Conference held in Singapore on September 15, 2006
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