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Accelerating Growth and Job Creation in South Asia

Accelerating Growth and Job Creation in South Asia
Accelerating Growth and Job Creation in South Asia

October 15, 2009 - There is a broad consensus that South Asia must continue to grow rapidly to eradicate poverty. There is also an emerging consensus that this growth must be more inclusive to address the growing gap between leading and lagging regions. The key link between growth and inclusiveness is creation of good jobs.


"This book … brings insight to the setting of priorities and strategies to accomplish the objective of sustained growth and poverty reduction."

MICHAEL SPENCE, Nobel Laureate in Economics, 2001

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Preface

The concentration of poor in the lagging regions of South Asia is generating considerable social and political concern. There is a broad consensus that South Asia must continue to grow rapidly and possibly faster to attack poverty more comprehensively than in the past. There is also an emerging consensus that this growth must be more inclusive to address the dichotomy of the two faces of South Asia resulting from the growing gap between leading and lagging regions.

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Part I: South Asia's Opportunities and Challenges

Part I identifies some of the key challenges facing South Asia which, if addressed, would accelerate growth further, especially in the smaller countries. These ‘second generation reforms,’ will build on the momentum that was achieved in the first phase of reforms starting in 1980. They include market integration-both globally and regionally, improved infrastructure, inclusive growth, and growth through improved connectivity. These reforms would allow South Asia to share its benefits widely. Strengthening of institutions would result in a stronger business environment and less conflict and corruption.

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Part II: Policies and Sources of Growth

Part II looks in-depth at sources of growth and policies that are needed to accelerate growth, as well as make growth more inclusive. The key link between growth and inclusiveness is creation of good jobs. South Asia is already undergoing a major structural transformation based on rapid growth of services and manufacturing. The GDP share of agriculture is shrinking fast. South Asia has so far has seen a rapid increase in the contribution of the services sector in employment. However, there is a concern that job creation has been mostly in the informal sector characterized by low skills and low earnings. At the same time, the reduction in the GDP share of agriculture is not matched by a commensurate reduction in the employment share.

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Part III: Regional Cooperation for Growth

Part III asks the important question of how more and better regional cooperation might help boost growth and equity in South Asia. The region is the least integrated of global regions and barriers to trade and investment among South Asian countries greatly exceed those with the rest of the world. There are different dimensions of this cooperation. The initial focus has been on trade, but there is now growing interest in infrastructure and services. The need to broaden cooperation with other regions, especially East and Central Asia, is also recognized.

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