Today, October 17, 2007, is World Poverty Day. Recent high economic growth in South Asia raises the distinct possibility that the region with the world’s largest concentration of poor people will not just reduce poverty, but it may eliminate it in a generation. However, it will require that South Asia’s growth is sustained and made more inclusive. This in turn means closing the large infrastructure deficit and realizing much faster growth in lagging regions and states. It will also require that human development is accelerated; and deep problems of governance overcome.
According to Praful Patel, Vice President, World Bank, South Asia is facing the challenge of institutional and structural reforms that are urgently needed to eliminate poverty.
Mr. Patel has laid out four key conditions that are required to achieve the goal of a South Asia free of poverty: 1. Address the huge infrastructure deficit 2. Inclusive Growth: Ensure growth benefits all 3. Human Development: Invest in people 4. Create a right governance environment.
Infrastructure Deficit
South Asia faces formidable infrastructure deficits. Power outages and load shedding are common. Not a single city in South Asia is able to deliver drinking water 24 hours, seven days a week even though in most cases there is plenty of water available. Traffic congestion is bringing many cities in the region to a standstill. Among the reasons for these deficits is lack of investment in the past, under-spending on operations and maintenance, and weak regulation.
An Illustration: Most utilities in South Asia are run directly by political leaders. In many cases the Chief Ministers of the State is the Chairperson of Water Boards in India. There is little distance between the policy maker and service provider – judge and jury are one and the same. Under these conditions, political considerations, not service delivery objectives, drive the provision of services.
Inclusive Growth
Inequality is rising in South Asia partly because certain well-intentioned policies have backfired, making it harder for poor people to benefit from growth.
An Illustration: In Sri Lanka, for example, agricultural policies have fueled inequality. Economic growth has been concentrated in the Western Province. The rest of the country has not grown because agriculture has hardly expanded, in large part due to policies that restrict farmers to growing rice rather than allowing them to diversify their crops. Recently a farmer was fined 35,000 rupees for growing bananas on his land. But, even though the evidence is clear that changingthe rice policy would enhance growth and benefit the poor, political inertia makes this a difficult shift.
Bank’s Initiatives: The Bank has shifted its strategy from one where it supported reforming states to one that emphasizes lagging states.
• In India, the Bank is focusing on Bihar and Orissa (and possibly Uttar Pradesh), with development policy operations; • In Pakistan, the Bank has programs in North West Frontier Province and Balochistan.
Human Development
Human development is lagging behind economic growth in most South Asian countries.
An Illustration: One symptom of institutional failure is the high rates of absenteeism among teachers in public schools and doctors in primary health clinics. In India, the average rates are 25 and 40 percent respectively. Even when providers are present, the quality of services provided is appallingly low. As a result, 80 percent of health spending is in the private sector.
Bank’s Initiatives: One way is to change the incentives is to make schools and health care providers more accountable for performance.
• In Bangladesh, they do this by giving students – in this case, female secondary school students– a choice. Girls can chose between public, private, NGO-run, or madrassa and the schools are compensated according to the number of girls they enroll. Not only is secondary school enrolment rising rapidly in Bangladesh – and twice as fast for girls as for boys – but many schools now have separate latrines for girls and boys. Schools are hiring female teachers to attract more girls to enroll there. • A second way to make schools accountable is to have parents and the local community participate in their management. Nepal has handed of the running of 5,000 public schools to management committees consisting of parents, teachers and respected members of the local community. Teacher and student absenteeism is down, and the program is likely to cover all schools in the country before long. • A third form of strengthening accountability is to allow schools to hire teachers from the local community, as is being done in Punjab, Pakistan. While they may be less qualified than the public sector teachers, these people are more reliable in attendance. Also, some studies show that the quality of teaching is not significantly different from that by more qualified (and more expensive) teachers from urban areas. • Finally, contracting out health services increases accountability and appears to improve outcomes. In Afghanistan, an independent evaluation of a program of contracting out health services showed, among other things, that about 40,000 babies a year were saved from dying before their first birthday, a tremendous turnaround in a country which had among the highest infant mortality rates in the world
Governance
South Asia suffers from various problems of weak governance. One symptom is the high levels of corruption.
An Illustration: • Bangladesh, for example, is at the bottom of the Transparency International index. Yet this same country has seen its GDP growth rate increase by one percentage point every decade. Poverty has fallen by about 1.8% per year for the last ten years. There are equal numbers of boys and girls in both primary and secondary school. And the country is on track to achieve the Millennium Development Goal in child mortality.
Bank’s Initiative: • In addressing Bangladesh’s governance problems, the Bank is building on its strengths. The presence of an active civil society has lead to the demand for bringing the state closer to communities – in other words, there is an organic demand for decentralizing one of the most centralized systems of governance. The Bank with the support of the United Nations Development Program (UNDP) and the EU (European Union) has stepped in to help strengthen the country’s local government system even as we support the funding of community organizations.
Looking ahead
By providing knowledge and financial assistance to support reforms, by working with governments to overcome political obstacles, and by engaging with lagging states and countries in conflict, the World Bank’s strategy in South Asia is producing results.
Additional Resources
- End Poverty in South Asia Analysis that shows it is possible to end poverty in Bangladesh, India, Nepal, Pakistan and Sri Lanka within the next 15 years. (Read More »)
- Blog: End Poverty in South Asia Shanta Devarajan, World Bank Chief Economist for South Asia, shares insights about the fight against poverty in the region. (Read More »)
- South Asia: Development Data A wide range of social and economic measures on South Asia, including links to the World Bank's most important online development databases. (Read More »)
- South Asia: Analysis and Research Compilation of all the World Bank's publications on South Asia, with 'search' options and links to analysis and research on other South Asian countries. (Read More »)
- World Bank Program in South Asia Launching pad to all information on World Bank activities in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.(Read More »)
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