Download Trends in Growth and Poverty in Asia

Trends in Growth and Poverty in Asia:
An Economic Background Paper for ASREP
Oxford Policy Management, January 2003
Executive Summary
This study examines growth and poverty reduction in the six economies that are most
significant for achieving the Millennium Development Goals in Asia.
Five of these countries have achieved historically high rates of per capita economic growth
over most of the last two decades, with the best growth performance being in China,
Indonesia (before the impact of the crisis at the end of the 1990s) and Vietnam. Growth
performance in South Asia has been weaker than in East and South-East Asia but average per
capita growth has still exceeded 3% per annum in Bangladesh and India. Pakistan is by some
way the worst performer with per capita income growth of less than 1% per annum over the
last decade. There have been significant changes in economic structure in most of the
countries, particularly a declining GDP share for agriculture and a sharply rising share for
exports, with manufacturing exports becoming of dominant importance.
This growth has been associated with a strong impact on income poverty and hence on
reductions in the proportion of the population below national and international poverty lines.
The poverty impact of growth has been greatest where access to education has been most
widespread – in East and South East Asia and those areas of India which have the highest
literacy rates – and where past land redistribution policies have created conditions for a
widespread sharing of the benefits of agricultural growth (in China and Vietnam, as earlier in
South Korea and Taiwan).
However, the poverty impact of growth has been showing a marked tendency to fall over
time in the rapidly growing economies. While the benefits of growth were initially widely
spread, regional and sectoral differentials have been widening (with agriculture lagging in
particular), reflected in growing income inequality.
In both China and India, growth has continued to be largely concentrated in particular areas
of the country (especially coastal regions), which are already relatively wealthy and have
markedly better education, infrastructure and human development indicators than the rest of
the country. As the engine of growth moves away from the impact of reforms in agriculture
(as it was in the early stages of China and Vietnam’s growth acceleration) towards
increasingly capital and skills-intensive manufacturing and services, the opportunities for the
poor and ill-educated to share in the benefits of growth appear to be weakening.
In relation to the achievement of the MDGs, the most marked regional difference is between
the low and highly unequal (including in relation to gender) educational levels in South Asia
and the near universal basic education in East and South East Asia.
Baseline scenarios for growth to 2015 are based on growth performance over the last decade
for those countries that have enjoyed relatively stable growth performance (Bangladesh,
India, Pakistan, Vietnam). In China, the growth baseline reflects the lower performance of
most recent years compared to the first part of the 1990s and the view that the growth
i
benefits of liberalisation and heavy levels of investment will moderate. In Indonesia, where
there has been a modest rate of recovery (compared to average growth rates in the 1980s and
first half of the 1990s) from the economic collapse of 1998/9, the baseline projects a
continuation of this modest growth, whereas as the high growth scenario is based on a return
to historical growth rates. In most cases, the high growth scenario is around 2.5% per annum
higher than the baseline.
The poverty impact of the projected growth depends heavily on whether the trends towards
increasing income inequality continue. Baseline- and higher- poverty impact scenarios are
therefore developed which are related to how rapidly income inequality is projected to rise.
This in turn depends on the extent to which there is successful investment in human
development (particularly access to education), and rural infrastructure, both of which are
strongly associated empirically with relatively pro-poor growth, as well as on policies related
to internal migration and arrangements for fiscal equalisation between rapidly growing and
lagging sub-national regions.
Several issues emerge as of critical importance for growth and poverty reduction prospects:
•
The dependence of the livelihoods of the poor on the lagging rural economy, and how
the benefits of growth and globalisation can reach the rural poor.
•
The prospects for South Asia to match East Asia’s growth rates through more
effective economic reform and human development.
•
The significance of the WTO as a shaping influence on domestic policy.
•
The prospects for China sustaining exceptionally high investment and savings, and for
increasing foreign direct investment to South Asia.
•
The need for, but risks associated with, financial sector reform.
The critical question is whether future growth will remain relatively biased against the poor
as it has been during the 1990s, or whether the political conditions exist for effective policy
responses both to boost growth in those countries that are not achieving their potential, and to
improve the response of poverty to growth.
ii
Contents
Executive Summary............................................................................................................ i
Contents ........................................................................................................................... iii
List of Tables .................................................................................................................... iv
List of Figures .................................................................................................................... v
Trends in Growth and Poverty in Asia: Main Report.........................................................1
1. Introduction ................................................................................................................1
2. Growth and Economic Change ..................................................................................3
3. Trends in Income Poverty and Inequality .................................................................14
What is Happening to Poverty?....................................................................................14
Has Growth Been Associated with Rising Inequality? ..................................................16
4. Performance against Other Millennium Development Goals ....................................19
5. Growth and Income Poverty Scenarios ....................................................................21
Growth Scenarios ........................................................................................................21
Growth and Poverty Reduction ....................................................................................22
Results of the Scenario Analysis..................................................................................23
6. Factors Affecting Growth and Poverty Reduction Prospects ....................................26
Appendix: The Growth-Elasticity of Poverty Reduction ....................................................29
References ......................................................................................................................31
Annex 1: Bangladesh ........................................................................................................32
A1.1 Growth and Poverty Reduction Performance .......................................................32
Economic Growth ........................................................................................................32
Poverty and Inequality .................................................................................................33
A1.2 Prospects for Growth and Poverty Reduction.......................................................37
A1.3 Growth and Poverty Reduction Scenarios............................................................38
References ......................................................................................................................38
Annex 2: China ..................................................................................................................39
A2.1 Growth and Poverty Reduction Performance .......................................................39
Economic Growth ........................................................................................................39
Poverty and Inequality .................................................................................................40
A2.2 Prospects for Growth and Poverty Reduction.......................................................48
Economic Factors ........................................................................................................48
Social Factors..............................................................................................................49
Political/Administrative Factors ....................................................................................50
Environmental Factors .................................................................................................50
Interaction with Other Asian Developing Economies....................................................50
A2.3 Growth and Poverty Reduction Scenarios............................................................50
References ......................................................................................................................53
Annex 3: India....................................................................................................................54
A3.1 Growth and Poverty Reduction Performance .......................................................54
Economic Growth ........................................................................................................54
Poverty and Inequality .................................................................................................56
A3.2 Prospects for Growth and Poverty Reduction.......................................................60
A3.3 Growth and Poverty Reduction Scenarios............................................................61
References ......................................................................................................................62
Annex 4: Indonesia............................................................................................................63
A4.1 Growth and Poverty Reduction Performance .......................................................63
Economic Growth ........................................................................................................63
Poverty and Inequality .................................................................................................64
A4.2 Prospects for Growth and Poverty Reduction.......................................................68
A4.3 Growth and Poverty Reduction Scenarios............................................................69
References ......................................................................................................................69
Annex 5: Pakistan..............................................................................................................70
iii
A5.1 Growth and Poverty Reduction Performance .......................................................70
Economic Growth ........................................................................................................70
Poverty and Inequality .................................................................................................71
A5.2 Prospects for Growth and Poverty Reduction.......................................................74
A5.3 Growth and Poverty Reduction Scenarios............................................................76
References ......................................................................................................................76
Annex 6: Vietnam ..............................................................................................................77
A6.1 Growth and Poverty Reduction Performance .......................................................77
Economic Growth ........................................................................................................77
Poverty and Inequality .................................................................................................78
A6.2 Prospects for Growth and Poverty Reduction.......................................................82
A6.3 Growth and Poverty Reduction Scenarios............................................................82
References ......................................................................................................................83
Annex 7: Cambodia, Nepal, Sri Lanka and East Timor ...................................................84
A7.1 Cambodia ............................................................................................................84
A7.2 Nepal ...................................................................................................................88
A7.3 Sri Lanka..............................................................................................................92
A7.4 East Timor............................................................................................................96
List of Tables
Table 1:
Per Capita GDP Growth ........................................................................................ 3
Table 2:
Indicators of Structural Economic Change............................................................ 4
Table 3:
Export Structure and Performance ........................................................................ 8
Table 4:
Regional Comparison of Structure of Exports .................................................... 10
Table 5:
Merchandise Exports as % of Exports of Goods and Services............................ 11
Table 6:
Destination of Merchandise Exports (%) ............................................................ 11
Table 7:
Significance of International Development Assistance, 1999............................. 12
Table 8:
Number of People (m) Below International Poverty Lines ................................. 14
Table 9:
Proportion of People (%) Below International Poverty Lines............................. 15
Table 10: Data on Poverty and Inequality ........................................................................... 15
Table 11: Poverty Headcount Based on International Poverty Line ................................... 16
Table 12: Recent Trends in Inequality and Poverty ............................................................ 17
Table 13: Trends in Inequality in Selected Rapidly Growing Asian Economies ................ 18
Table 14: Millennium Development Goals ......................................................................... 20
Table 15: Growth Scenarios ................................................................................................ 21
Table 16: Projected Growth in Per Capita GDP .................................................................. 22
Table 17: Baseline Growth-Elasticities of Poverty Reduction ............................................ 23
Table 18: Results of the Scenario Analysis ......................................................................... 24
Table A1.1: Indicators of Structural Economic Change...................................................... 33
Table A1.2: Structure of Merchandise Exports and Growth of Total Exports.................... 33
Table A1.3: Trends in Poverty and Inequality..................................................................... 35
Table A1.4: Performance Against Millennium Development Goals................................... 36
Table A2.1: Indicators of Structural Economic Change...................................................... 40
Table A2.2
Structure of Merchandise Exports and Growth of Total Exports.................... 40
Table A2.3: Poverty Impact of Alternative Forms of Rural Public Investment.................. 42
Table A2.4: GDP per Capita at Provincial Level ................................................................ 43
Table A2.5: Educational Enrolment and Literacy at Provincial Level................................ 44
Table A2.6: Population and Demographic Change at Provincial Level.............................. 45
Table A2.7: Fiscal Revenue and Expenditure at Provincial Level...................................... 46
Table A2.8: Performance Against Millennium Development Goals................................... 47
iv
Table A2.9:
Table A2.10:
Table A3.1:
Table A3.2:
Table A3.3:
Table A3.4:
Table A4.1:
Table A4.2:
Table A4.3:
Table A4.4:
Table A4.5:
Table A5.1:
Table A5.2:
Table A5.3:
Table A5.4:
Table A5.5:
Table A5.6:
Table A6.1:
Table A6.2:
Table A6.3:
Table A7.1:
Table A7.2:
Table A7.3:
Table A7.4:
Table A7.5:
Table A7.6:
Table A7.7:
Table A7.8:
Table A7.9:
Table A7.10:
Table A7.11:
Table A7.12:
Table A7.13:
Table A7.14:
Scenarios of Poverty Prediction for Rural China ............................................ 51
Simulation Outcomes of Poverty Reduction 1990 to 2015 ......................... 52
Indicators of Structural Economic Change...................................................... 55
Structure of Merchandise Exports and Growth of Total Exports.................... 55
Economic and Social Indicators for India’s Major States ............................... 57
Performance Against Millennium Development Goals................................... 58
Indicators of Structural Economic Change...................................................... 64
Structure of Merchandise Exports and Growth of Total Exports.................... 64
Trends in Poverty............................................................................................. 65
Regional Distribution of Poverty..................................................................... 66
Performance Against Millennium Development Goals................................... 67
Indicators of Structural Economic Change...................................................... 71
Structure of Merchandise Exports and Growth of Total Exports.................... 71
Poverty Headcount Estimates for Pakistan...................................................... 72
Incidence of Poverty by Province and Region During 1990s ......................... 72
Inequality – Gini Coefficients ......................................................................... 72
Performance Against Millennium Development Goals................................... 73
Indicators of Structural Economic Change...................................................... 78
Structure of Merchandise Exports and Growth of Total Exports.................... 78
Performance Against Millennium Development Goals................................... 81
Growth Per Capita: Five Year Averages ......................................................... 84
Indicators of Structural Economic Change...................................................... 85
Performance Against the Millennium Development Indicators ...................... 86
Growth Per Capita: Five Year Averages ......................................................... 88
Indicators of Structural Economic Change...................................................... 89
Structure of Merchandise Exports and Total Export Growth.......................... 89
Significance of International Development Assistance................................... 89
Performance Against the Millennium Development Goals............................. 90
GDP Growth per Capita: Five Year Averages ................................................ 92
Indicators of Structural Economic Change.................................................. 93
Structure of Merchandise Exports and Total Export Growth...................... 93
Significance of International Development Assistance............................... 93
Performance Against the Millennium Development Goals......................... 94
Inequality and Poverty Indicators................................................................ 96
List of Figures
Figure 1: Comparative Performance in Reducing Income Poverty .................................... 14
Figure A1.1:
Bangladesh: Growth Performance 1980-2001 ............................................ 32
Figure A1.2:
Trends in Poverty Incidence and Inequality ................................................ 34
Figure A2.1:
China: Growth Performance 1980-2001...................................................... 39
Figure A3.1:
India: Growth Performance 1980-2001....................................................... 54
Figure A3.2:
Poverty Incidence in India, 1960-2000........................................................ 56
Figure A3.3:
Ratio of Rural to Urban Poverty.................................................................. 57
Figure A4.1:
Indonesia: Growth Performance 1980-2001................................................ 63
Figure A4.2:
Trends in Poverty Over the Crisis Period.................................................... 65
Figure A5.1:
Pakistan: Growth Performance 1980-2001.................................................. 70
Figure A6.1:
Vietnam: Growth Performance 1985-2001 ................................................. 77
Figure A6.2:
Regional Differences in Poverty.................................................................. 79
Figure A6.3:
Real Per Capita Expenditure Changes......................................................... 80
v
Figure A7.1:
Figure A7.2:
Figure A7.3:
Figure A7.4:
Cambodia Growth Performance 1980- 2001............................................... 84
Nepal Growth Performance: 1982- 2001..................................................... 88
Sri Lanka Growth Performance: 1980- 2001 .............................................. 92
Fluctuations in GDP: 1998-2003................................................................. 96
vi
Trends in Poverty and Growth in Asia
Oxford Policy Management
Trends in Growth and Poverty in Asia: Main Report1
1.
Introduction
The objective of this paper is to provide background information and data on:
•
•
•
Recent performance and trends in economic growth in the main Asian countries and
sub-regions
Trends in inequality and whether Asian growth has been associated with increased
inequality
Performance against the Millennium Development Goals.
The paper develops alternative scenarios for growth and poverty reduction for the six major
Asian developing economies (Bangladesh, China, India, Indonesia, Pakistan and Vietnam).
Asia’s aggregate performance in achieving the Millennium Development Goals will be
determined almost entirely by the performance of these countries.
The paper is structured as follows. Section 2 provides information on economic growth
performance including the main changes in economic structure and exports over the last two
decades. Section 3 presents information on income poverty and inequality and discusses the
relationship between GDP growth and (income or consumption) poverty reduction. Section 4
discusses performance against the other Millennium Development Goals. The results of the
scenario analysis are presented in Section 5 and major issues affecting growth and poverty
reduction prospects are discussed in Section 6. An appendix discusses some methodological
and empirical issues. More detailed discussion for each country is included in Annexes 1-6 to
the Main Report. Annex provides summary information on growth and poverty reduction for
a selection of smaller countries (Cambodia, East Timor, Nepal, Sri Lanka).
Two points should be noted about the scope and limitations of this study.
First, while there are active initiatives under way to improve the quality and international
comparability of data on poverty, there are still large areas of uncertainty about the
magnitude and trends of key variables – and a fortiori about the relationships between these
variables. For instance, Cassen (2002) notes that for India, “the data do not really permit
resolution of a key issue, whether poverty decline has slowed or not” over the 1990s.
Estimates of the poverty headcount against the international poverty line for China in 1999
appear to differ by around 20 million, and for Indonesia (where the issue is complicated by
the effects of the economic crisis and recovery process during which poverty levels changed
rapidly), alternative published figures for the same variable differ by almost 100%. Major
revisions of international estimates of poverty for the 1990s are reported in Global Economic
Prospects 2003 compared to the previous year, but the comparative basis of other published
1
This paper has been prepared by Stephen Jones of Oxford Policy Management with contributions from Alex
Duncan and other OPM staff. Research assistance was provided by Astrid Cox. Thanks are due to Professor
Robert Cassen (LSE), Nithya Nagarajan (World Bank) and Professor Shujie Yao (Middlesex University) for
assistance in accessing relevant material and for comments from Sophie Pongracz of DFID. Contact:
[email protected], Oxford Policy Management, 6 St Aldates Courtyard, 38 St Aldates, Oxford OX1
1BN. Tel 01865 207300.
1
Trends in Poverty and Growth in Asia
Oxford Policy Management
estimates, including those in the World Development Indicators, are not clear. More detailed
investigation of sources could resolve or explain some of these discrepancies, though others
reflect basic weaknesses in the data available.
Second, the limited time and resources available for the study2 (and the need to use
approaches that can provide comparability across the six focus countries), as well as limiting
the extent to which data discrepancies could be resolved, has required the use of simplifying
assumptions and methods for generating the projections used in the scenarios. In most cases
the data is rich enough to bear more sophisticated analysis (though problems with
comparability would remain). This could for instance involve directly modelling the full
relationship between growth, inequality and poverty, basing growth projections on explicit
models of the growth process at the national level, or working with household survey data
that provides complete information on the shape of the distribution function for personal
income or consumption. It has also been necessary to focus on the single poverty measure of
headcount below US $1 per day, whereas a more complete analysis would use a wider range
of indicators.
Despite these limitations, the data and methods used do appear to be sufficient to identify the
main features and trends in growth and poverty reduction in Asia, including the salient
similarities and differences at national and sub-regional level. The scenario analysis does
provide a solid basis for making estimates of the likely order of magnitude of changes based
on current trends or plausible modifications to these trends, as well as suggesting hypotheses
for more detailed and sophisticated investigation. However, much deeper analysis at the
country level would be required to draw policy conclusions.
2
The study was contracted on 12th December 2002 for delivery in draft by January 3rd 2003.
2
Trends in Poverty and Growth in Asia
Oxford Policy Management
2.
Growth and Economic Change
Table 1 shows the comparative growth performance of the six countries for the last four fiveyear periods back to 1982, and comparisons between the South Asia and East Asia/Pacific
regions as a whole (respectively dominated by India and China) and middle and low-income
countries in other regions of the world. The salient features are:
•
All of the six countries have enjoyed a significant level of per capita growth over each
of the periods, with the exception of Indonesia and Pakistan in 1997-2001.
•
The growth rates of the three East / South East Asian economies have generally
significantly exceeded those of the three South Asian ones, with China having the
highest growth rate by some margin in each period.
•
Within South Asia, Pakistan’s growth performance has stagnated comparing the
1980s with the 1990s, while growth for Bangladesh and India has improved.
•
In each of the sub-periods, East Asia/Pacific was the best performing region of the
developing world, and South Asia was the second best performing – though growth
performance was almost identical between these two regions in the last sub-period.
Table 1:
Per Capita GDP Growth
Bangladesh
China
India
Indonesia
Pakistan
Vietnam
East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia
Sub-Saharan Africa
1982-6
1.6
9.8
2.8
3.3
3.5
..
1987-91
1.5
6.2
3.3
5.8
3.1
3.0
1992-6
2.8
10.9
4.7
5.8
2.0
6.9
1997-2001
3.5
6.8
3.3
-1.5
0.6
4.6
1982- 86
7.1
N/A
1.7
2.1
5.1
0.5
1987- 91
7.8
-0.8
1.7
3.8
5.3
2.2
1992- 96
9.9
-3.8
3.6
2.7
6.1
2.1
1997-2001
5.0
2.8
2.3
3.1
4.9
3.0
Source: WDI (2002) - Averages for each five year period.
Table 2 shows information on value added and employment by sector, and the relative
importance of investment, savings, exports and foreign direct investment in the six economies
and for the international comparison between regions of the developing world, as indicators
of changes in economic structure. This shows that:
•
The share of agriculture in GDP has fallen over the period in all the countries. The fall
has been largest in Bangladesh and China, and smallest in Pakistan.
3
Trends in Poverty and Growth in Asia
Oxford Policy Management
•
The growth of the share of industry has been largest in Bangladesh and Indonesia,
followed by China. China and Indonesia have substantially larger GDP shares of
industry than the other countries, followed by Vietnam. Bangladesh’s rapid increase
in the share of industry has brought it up to similar levels to the other two South Asian
economies.
•
The share of employment in agriculture3 has fallen most significantly in China
followed by Indonesia, Pakistan, and Vietnam. Rapid growth of manufacturing
exports has been an important driver of economic growth in each of the countries that
has achieved a significant increase in per capita income, and the industrial share of
GDP has increased significantly in Bangladesh, China, and Indonesia. However, the
employment share of industry does not appear to be rising except in Indonesia.
•
The ratio of exports to GDP has increased over the period in all the countries, most
dramatically in Vietnam, which has gone from having one of the lowest proportions
(7.2%) to the highest (43%). The share has approximately doubled in both Bangladesh
and India, but in each remains only about half that of China (23.7%). Pakistan has
seen the most modest increase.
•
Gross domestic savings are and have remained an exceptionally high proportion of
GDP in China, and the share of savings has risen sharply from low levels in
Bangladesh and Vietnam. Savings shares have remained low in Pakistan and
approximately constant in India – at a significantly lower level than in Indonesia even
when savings fell there during 1997-2001.
•
In Bangladesh, China and Vietnam the investment share of GDP has increased
substantially. In Indonesia the investment share fell in the last period (when Indonesia
faced severe economic and political crisis). It has remained fairly constant in India,
and is at much the lowest levels (and falling) in Pakistan.
•
In 1982-6, none of the countries were significant recipients of foreign direct
investment (less than 0.5% of GDP in any of the countries). During the 1990s China,
Vietnam and Indonesia became extremely significant recipients of FDI (of the order
of 4-5% of GDP), though Indonesia subsequently suffered net capital outflow at the
time of the economic crisis. FDI has also increased from a very low base in the South
Asian countries, but remains below 1% of GDP.
•
East Asia and the Pacific is the only region in which the industrial share of GDP has
increased over the period. It has also increased slightly in South Asia, having fallen in
the other regions. Export shares have increased sharply in both regions, as they have
in Europe and Central Asia, but unlike the other three regions. East Asia/Pacific has
markedly higher savings and investment than any other region.
Table 2:
Indicators of Structural Economic Change
3
This measure needs however to be treated with caution in the Asian context where typically households
significantly or primarily engaged in agriculture may have a wide range of other income sources – especially in
more dynamic economies.
4
Trends in Poverty and Growth in Asia
Oxford Policy Management
19821986
40.7
16.4
42.9
19871991
35.1
17.5
47.4
19921996
25.7
23.1
51.2
19972001
24.5
24.5
51.0
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
57.9
11.7
25.6
65.7
14.2
15.5
63.2
9.6
25.0
..
..
..
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
7.0
0.0
1.7
13.3
0.0
7.2
0.0
6.2
14.4
0.0
9.6
0.0
12.9
18.6
0.0
13.6
0.4
16.4
22.1
0.4
19821986
30.8
44.0
25.2
19871991
25.8
43.0
31.3
19921996
20.6
47.5
31.9
19972001
17.2
50.3
32.4
Employment in agriculture (% of total employment)
Employment in manufact’g (% of total employment)
Employment in other (% of total employment)
62.5
16.9
20.6
55.3
16.7
26.0
50.0
15.9
34.0
46.6
13.2
40.3
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
9.7
0.4
34.4
29.3
0.5
15.3
1.0
36.6
28.2
1.3
21.4
5.1
41.5
34.8
5.6
23.7
4.3
41.1
35.6
4.9
19821986
34.4
26.1
39.5
19871991
31.6
26.9
41.5
19921996
30.0
27.0
43.0
19972001
26.3
26.7
47.0
..
..
..
68.7
13.5
..
66.8
13.0
..
..
..
..
6.0
0.0
19.6
20.0
0.0
7.1
0.1
21.4
22.0
0.0
10.3
0.4
21.0
22.7
0.4
12.4
0.6
20.7
22.0
0.7
Bangladesh
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
China
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
India
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
5
Trends in Poverty and Growth in Asia
Oxford Policy Management
19821986
23.1
36.8
40.2
19871991
20.0
34.5
45.4
19921996
17.3
40.4
42.3
19972001
17.4
45.3
37.3
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
54.8
12.2
32.9
55.4
11.6
31.8
47.9
17.0
35.0
43.1
17.7
39.3
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
24.0
0.3
29.6
23.8
0.3
24.6
0.8
32.7
26.4
0.8
26.7
1.7
31.7
27.5
1.9
40.0
-0.8
25.6
23.1
3.7
19821986
29.2
22.6
48.2
19871991
26.2
24.6
49.2
19921996
25.5
24.9
49.6
19972001
26.5
23.5
50.0
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
52.5
19.7
27.5
50.0
20.0
29.8
47.9
18.6
33.4
46.3
17.7
36.0
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
11.1
0.2
7.2
16.8
0.3
14.5
0.5
11.1
17.2
0.6
16.1
1.0
12.7
18.0
1.0
15.9
0.8
11.5
14.5
0.9
19821986
36.1
35.3
28.6
19871991
40.3
26.4
33.2
19921996
29.2
29.3
41.5
19972001
25.3
33.9
40.7
..
..
..
74.7
12.1
13.3
70.7
12.7
16.2
68.8
..
..
7.2
0.0
4.8
..
..
18.7
0.5
7.9
11.4
..
34.9
9.2
16.9
26.8
10.2
43.6
5.9
22.3
27.5
5.8
Indonesia
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Pakistan
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Vietnam
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
6
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Europe and Central Asia
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
1982- 86 1987-91 1992-96
N/A
16.3
11.8
N/A
44.5
37.8
N/A
39.2
50.4
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
Latin America and the Caribbean
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
Middle East and North Africa
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
Sub Saharan Africa
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
7
N/A
0.1
N/A
N/A
0.1
32.9
1.0
24.7
22.2
1.5
37.0
2.8
23.0
20.8
3.3
1982- 86 1987-91 1992-96
10.4
9.2
8.1
40.6
37.9
33.7
49.0
52.9
58.2
19972001
7.4
31.0
61.6
14.4
0.6
22.0
18.4
0.9
22.7
0.2
28.3
24.5
0.1
19972001
10.5
33.9
55.6
14.1
1.6
19.9
19.3
1.9
16.2
3.9
19.3
19.4
4.6
1982- 86 1987-91 1992-96
11.8
14.7
13.9
42.3
36.3
40.8
45.9
49.0
45.3
19972001
13.8
39.3
46.9
28.2
0.4
21.5
25.5
1.5
14.4
0.9
23.1
20.2
1.1
31.9
0.8
22.8
22.1
1.3
29.3
0.6
22.5
22.5
1.8
1982- 86 1987-91 1992-96
18.7
18.5
17.9
34.2
34.1
32.1
47.1
47.5
50.0
19972001
17.2
29.1
53.6
26.3
0.7
17.2
19.8
0.8
27.3
0.4
20.2
21.4
0.7
26.7
N/A
17.0
17.9
1.0
27.5
1.3
15.8
16.8
2.1
28.7
2.2
14.9
17.3
3.0
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East Asia and the Pacific
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
1982- 86 1987- 91 1992-96 1997- 2001
27.1
23.4
19.2
16.5
40.1
39.5
43.3
46.3
32.8
37.1
37.5
37.1
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
17.1
0.6
31.0
27.8
0.7
23.1
1.3
33.5
28.0
1.3
29.2
3.9
37.0
33.6
3.3
38.3
3.6
36.1
30.7
4.2
1982- 86 1987- 91 1992-96 1997- 2001
34.2
31.2
29.1
26.2
24.8
25.8
26.4
26.1
41.0
43.0
44.5
47.8
South Asia
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
7.4
0.1
16.4
19.3
0.0
8.8
0.1
18.6
20.8
0.1
11.9
0.4
19.1
21.8
0.5
13.9
0.7
19.0
21.1
0.7
Source: WDI 2002
Table 3 provides information about export structure and performance.
•
Vietnam has had the most dynamic growth of exports, followed by Bangladesh and
China, and then India. Pakistan’s strong export growth in the first two periods tailed
off sharply during the 1990s.
•
Manufactured goods dominate merchandise exports for all the countries except
Indonesia (where oil and gas are major exports) and Vietnam (for which comparable
data is not available).
Table 3:
Export Structure and Performance
Bangladesh
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
Export growth (% per annum)
1982-6
1987-91
14.1
19.4
2.3
63.8
0.0
3.7
8.2
15.9
1.2
74.6
0.0
13.4
8
1992-6 1997-2001
2.9
11.4
0.6
84.7
0.0
16.1
2.2
7.8
0.3
89.5
0.0
11.4
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China
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
Export growth (% per annum)
1982-6
5.7
15.3
23.0
47.7
2.2
8.0
1987-91
4.6
13.6
8.5
67.7
2.6
16.5
1992-6 1997-2001
1.9
1.2
9.7
6.3
4.2
3.0
82.0
87.3
1.8
2.0
5.8
16.2
India
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
Export growth (% per annum)
1982-6
3.2
24.7
11.2
54.7
6.0
4.0
1987-91
2.6
17.0
2.9
70.5
5.3
10.0
1992-6 1997-2001
1.7
1.7
17.1
16.5
2.0
0.6
73.9
76.5
3.6
2.6
13.9
6.6
Indonesia
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
Export growth (% per annum)
1982-6
6.5
8.4
70.4
10.5
3.8
1.3
1987-91
7.9
12.1
42.2
32.6
5.2
8.9
1992-6 1997-2001
5.2
4.1
11.3
10.9
27.9
23.0
50.9
49.7
4.7
4.7
9.0
3.1
Pakistan
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
Export growth (% per annum)
1982-6
13.6
19.4
2.2
63.2
0.5
9.5
1987-91
13.6
11.8
1.0
73.1
0.3
11.2
1992-6 1997-2001
5.2
2.3
10.0
11.8
0.9
0.9
83.4
84.7
0.2
0.2
3.4
1.2
1987-91
1992-6
1997-8
21.4
1987-91
2.0
37.9
16.3
27.4
16.4
29.7
1992-6
0.4
36.9
27.0
27.2
8.4
13.7
1997-8
0.4
31.5
17.2
47.2
3.6
Vietnam
% of merchandise exports:
1982-6
Agricultural raw materials (%)
16.9
Food (%)
72.4
Fuel (%)
6.3
Manufactures (%)
3.1
Ores and metals (%)
1.3
Export growth (% per annum)
% of merchandise exports:
Beverages, Tobacco, Oils/Fats (%)
Food (%)
Fuel (%)
Manufactures (%)
Crude Materials (%)
9
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Table 4:
Regional Comparison of Structure of Exports
Europe and Central Asia
% Merchandise Exports
Agricultural raw materials
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
1982- 86
1987- 91
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Latin America and the Caribbean
% Merchandise Exports
Agricultural raw materials exports
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
1982- 86
1987- 91
3.4
30.7
30.6
24.1
11.0
3.6
27.2
22.3
34.4
12.0
Middle East and North Africa
% Merchandise Exports
Agricultural raw materials exports
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
1982- 86
1987- 91
1.1
3.9
79.5
13.2
2.9
0.7
3.9
75.8
17.4
2.8
Sub Saharan Africa
% Merchandise Exports
Agricultural raw materials exports
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
1982- 86
1987- 91
4.9
18.3
28.9
13.2
8.0
3.3
13.4
27.9
20.2
7.5
East Asia/ Pacific
Agricultural raw materials exports
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
1982- 86
9.6
22.2
25.9
34.2
3.7
1987-91
8.1
17.0
13.1
55.7
3.4
1992-96 1997-2001
4.1
2.4
12.2
9.1
7.8
6.5
71.9
78.1
2.2
2.2
South Asia
Agricultural raw materials exports
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
1982- 86
6.5
25.4
8.8
54.8
4.3
1987-91
5.3
17.5
2.4
69.7
3.9
1992-96 1997- 2001
2.5
1.8
15.7
15.4
1.7
0.6
76.3
78.5
2.6
1.9
10
1992-96 1997-2001
3.1
8.2
21.2
53.0
6.8
3.1
6.5
22.0
54.5
7.4
1992-96 1997-2001
3.5
25.4
16.0
44.8
9.6
3.1
23.9
15.4
47.9
9.0
1992-96 1997-2001
0.6
4.3
73.9
19.2
1.9
0.7
4.0
75.5
18.5
1.4
1992-96 1997-2001
7.4
19.9
20.3
33.5
8.9
5.6
18.4
27.0
36.0
8.1
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Table 4 shows that the increasing share of manufacturing exports which occurred for South
Asia and for East Asia and the Pacific also occurred in Sub-Saharan Africa and in Latin
America and the Caribbean.
Table 5 shows that merchandise exports account for 85-90% of total exports of goods and
services for four of the countries. The main exception is India where the share is only 71.5%.
India’s service exports have both increased more rapidly than merchandise exports and
changed dramatically in content over the whole period – from being principally travel and
tourism related to being mainly business services (such as software and forms of business
outsourcing).
Table 5:
Merchandise Exports as % of Exports of Goods and Services
1982-6
79.6%
89.7%
74.4%
96.7%
78.1%
..
Bangladesh
China
India
Indonesia
Pakistan
Vietnam
1987-91
81.7%
91.0%
77.9%
92.4%
82.2%
87.6%
1992-6
82.9%
88.8%
80.7%
89.6%
82.4%
75.6%
1997-2001
88.0%
88.5%
71.5%
90.9%
85.8%
80.8%
Source: WDI 2002
Table 6 shows changes in the destination of exports over the 1990s. The most marked
features have been the falls in the share of exports to Asia (except for India and Vietnam),
and the sharp rise for all the countries in the share to North America (principally the USA).
The export share to Western Europe has also risen for all the countries except India and
Pakistan. The decline in exports to the Rest of the World mainly reflects the collapse of
trading links with the former Soviet bloc. The declining share to Asia partly reflects the
continuing recession in Japan – however Japan remains a major source of exports especially
for China.
Table 6:
Destination of Merchandise Exports (%)
Asia
From\To
Bangladesh
China
India
Pakistan
Indonesia
Viet Nam
W. Europe
1990 2001
North
America
1990 2001 1990 2001
14.0
68.8
21.9
27.9
66.6
43.8
34.8
10.7
31.3
41.0
12.7
7.9
7.6
47.5
28.9
22.3
58.4
47.6
50.0
16.0
27.2
29.0
14.9
28.1
32.5
9.7
17.2
15.0
14.4
0.2
Source: ADB 2002
11
37.7
27.7
24.3
27.1
17.5
8.9
Middle East
Rest of
World
1990 2001
1990 2001
4.7
2.9
2.2
2.3
7.3
9.5
8.8 14.4
3.0
2.9
1.1
0.9
14.0
1.8
8.6
6.6
22.3 10.0
7.3
7.1
3.3
6.3
47.1 14.5
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Table 7:
Significance of International Development Assistance, 1999
Aid per capita (USD)
Aid as % Central
Government Expenditure
Bangladesh
21.4
9.5
China
2.2
1.9
India
2.1
1.5
Indonesia
7.8
10.7
Pakistan
5.7
5.4
Vietnam
23.5
18.4
Country
Source: WDI 2002
Table 7 shows the relative importance of aid in each country. While aid is a factor of
considerable macroeconomic significance for Vietnam, Indonesia, Bangladesh, and to a
lesser degree Pakistan, its importance in macroeconomic terms for both China and India is
very limited. India has the largest number of poor people and the highest rate of poverty (see
below) but receives the least in per capita terms.
The overall growth picture can be summarised for each of the countries as follows:
•
Bangladesh has increased its growth rate substantially in the 1990s compared to the
1980s and managed a significant increase of manufactured exports (principally
textiles). Investment (including FDI), savings, and exports have increased
substantially as proportions of GDP but remain well below the levels required for a
substantial acceleration of growth beyond the 3% per capita of the 1990s. Almost
88% of Bangladesh’s exports are to Western Europe or North America, up from 67%
in 1990 as a result of declines in exports within the region and to the Soviet bloc.
•
China’s economy, while slowing in the second half of the 1990s, has grown at an
unprecedented rate for more than two decades, supported by extremely high levels of
investment and savings. While growth was initially related to agricultural reforms, it
has increasingly been driven by exports of manufactured goods to developed country
markets. North America’s share of China’s exports has increased from under 10% in
1990 to 28% in 2001.
•
India’s growth rates improved after 1991 and it has achieved increases in exports
(including the emergence of major new service industries) and FDI. However, levels
of savings and investment remain moderate by international standards, and
particularly by comparison with China. India has since 1990 increased the proportion
of its exports going to other Asian countries and to North America, while the
proportion to the Soviet bloc has fallen.
•
Indonesia grew rapidly through until the economic crisis of the late 1990s with high
levels of savings and investment. Recovery from the crisis has been relatively strong
though growth rates have not returned to pre-crisis levels. Indonesia remains the most
dependent of the countries on regional markets.
12
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•
Pakistan stands out as substantially the worst economic performer with symptoms of
economic stagnation through the 1990s in terms of declining investment, the ending
of export growth, and relatively stable shares of GDP and employment by sector. The
share of Pakistan’s exports going to North America and the Middle East has increased
at the expense of exports to Europe and Asia.
•
Data is not available on a comparable basis for Vietnam but its growth and export
performance has been strong following the start of economic reforms in the mid1980s, although growth rates have not matched those of China and export growth in
particular suffered as a result of the Asian crisis. Manufactured exports increased
from negligible levels in 1982-6 to 47% of exports in 1998-9. Food and agricultural
exports account for around a third of total exports. Exports to Western Europe, North
America and Asia have increased to replace trade with the Soviet bloc.
13
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3.
Trends in Income Poverty and Inequality
What is Happening to Poverty?
Figure 1 provides a regional comparison of progress against the income poverty Millennium
Development Goal. While East Asia and the Pacific (dominated by China) has succeeded in
reducing poverty at a rate substantially in excess of what is required to half absolute poverty
from 1990 to 2015, the rate of reduction of poverty in South Asia has not been sufficient to
stay on track, though the performance has been substantially better than in Africa.
Figure 1:
Comparative Performance in Reducing Income Poverty
Source: MDG monitoring website
Table 8:
Number of People (m) Below International Poverty Lines
East Asia and
Pacific
(excluding China)
Europe/Central
Asia
Latin
America/Carib
Middle East
/North Africa
South Asia
Sub-Saharan
Africa
Total
USD 1 per day (PPP)
1990
1999
2015
486
279
80
USD 2 per day (PPP)
1990
1999
2015
1114
897
339
110
6
57
24
7
7
295
31
269
97
120
45
48
57
47
121
132
1117
5
6
5
50
68
62
506
241
488
315
264
404
1010
386
1128
480
1139
618
1292
1169
809
2712
2802
2320
14
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Tables 8 and 9 provide estimates and projections from the World Bank of the numbers and
proportions below two internationally defined poverty lines. The projections are for further
sharp falls in absolute poverty in East Asia, driven by China’s performance, and a significant
but still limited reduction in absolute poverty in South Asia.
Table 9:
Proportion of People (%) Below International Poverty Lines
East Asia and
Pacific
(excluding China)
Europe/Central
Asia
Latin
America/Carib
Middle East
/North Africa
South Asia
Sub-Saharan
Africa
Total
USD 1 per day (PPP)
1990
1999
2015
30.5
15.6
3.9
USD 2 per day (PPP)
1990
1999
2015
69.7
50.1
16.6
24.2
1.4
10.6
5.1
1.1
1.4
64.9
6.8
50.2
20.3
18.4
9.3
11.0
11.1
7.5
27.6
26.0
18.9
2.1
2.2
2.1
21.0
23.3
16.0
45.0
47.4
36.6
49.0
15.7
46.0
89.8
76.0
84.8
74.7
68.0
70.4
29.6
23.2
13.3
62.1
55.6
38.1
Source: World Bank Global Economic Prospects and the Developing Countries, 2003
Table 10 provides data on poverty and inequality from national sources for the late 1990s.
Estimates of the Gini coefficient and of the ratio of the incomes of the top 20% to the bottom
20% suggest that Bangladesh, China and Pakistan have the most unequal income distribution,
while Indonesia, followed by Vietnam, is the most equal. Poverty is (based on national
poverty lines) higher in rural than urban areas though for Bangladesh, India and Indonesia the
differential in rates is quite limited. The Chinese official poverty line is set very low by
international standards and is not particularly useful for analytical purposes.
Table 10:
Data on Poverty and Inequality
Country
% Population Below
National Poverty Line
Date
Rural
Total Urban
Bangladesh
China
44.7
..
43.3
3.1
India
Indonesia
Pakistan
Vietnam
26.1
23.4
32.2
37.0
23.6
19.5
22.4
9.0
44.9 May 99
3.7 Urban 97, Rural
99
27.1 1999/2000
26.1 Feb 1999
36.3 1998-9
45.0 1998
Source: Asian Development Bank
15
Ratio of
incomes Date
of top to
bottom
20%
12.7 May 99
7.9 1998
5.7
4.0
7.1
5.5
1997
Feb 99
1996-7
1998
Gini
Coefficient
0.39
0.40
0.38
0.31
0.40
0.35
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Table 11 shows estimates of the proportion of the population in each country below the
international poverty line of USD 1 per day (at purchasing power parity).4 These figures
suggest that more than half of the poor in this group of countries are in India, with around a
third in China, and the remainder are fairly evenly divided between the other four countries in
absolute numbers.
Table 11:
Country
Bangladesh
China
India
Indonesia
Pakistan
Vietnam
Poverty Headcount Based on International Poverty Line
Poverty
Headcount
(%)
1999
29.1%
18.8%
42.0%
12.9%
32.6%
37.0%
Population
(m)
1999
127
1,247
992
206
135
77
Poverty
Headcount
(m)
1999
37
234
417
27
44
29
Population Gross National
Growth
Income p.c.
(% per annum)
(USD)
1999-2015
1999
1.5
350
0.7
780
1.3
440
1.2
580
2.3
450
1.2
370
Source: WDI (2002), MDG (2002)
Has Growth Been Associated with Rising Inequality?
Growth has not necessarily been associated with rising inequality during periods of growth in
these countries. The Gini coefficient (GC) fell in China with the initiation of economic
reforms (from 31.7 in 1978 to 28.4 in 1983 – World Income Inequality Database: Zhang Ping
series), or on an alternative measure from 32.0 in 1980 to 25.7 in 1984. Likewise in Indonesia
between 1978 and 1990 the GC fell from 38 to 32. Inequality within urban and rural areas
also fell in Indonesia over this period (GC from 38 to 34 and 34 to 25 respectively).
Both these episodes were associated with growth that was strongly agriculture-based as was
Vietnamese growth in the period immediately after economic reforms began. In each case,
inequality subsequently increased, to 38.2 in 1988 and 43.0 in 1995 (Zhang Ping) in China. In
Indonesia the Rural GC increased from 25 in 1990 to 28.6 in 1996, and the Urban from a
minimum of 32 in 1987 to 37 in 1996.
Trends in income inequality and poverty headcount for the six countries are summarised in
Table 12. In summary, while earlier growth periods were relatively pro-poor, recent growth
in Bangladesh, China, India and Vietnam has been associated with rising inequality. The
poverty impact of the growth that has occurred in 1990s has therefore been less than past
experience alone would have predicted.
4
It should be noted that there are significant discrepancies between estimates from different sources for the
baseline level of headcount poverty using the international definition and that the estimates of poverty for 1990
and 1999 were significantly modified in Global Economic Prospects 2003 compared to 2002.
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Table 12:
Recent Trends in Inequality and Poverty
Income Inequality
Bangladesh Having remained around 26 during
the 1980s, the GC rose during the
1990s to around 31 by 2000.
China
Income inequality measured by the
GC fell during the first half of the
1980s to 28.4 but subsequently has
risen rapidly reaching 43 by 1995.
Income inequality appears to have
fallen slightly from 31.5 to 29.7 over
the 1980s. While there are problems
of comparability, it appears that the
GC increased after 1990 to around 38
by the end of the decade.
India
Indonesia
Pakistan
Vietnam
Income inequality fell during rapid
growth from 1978 to 1990 (GC from
38 to 32). It appears to have
increased subsequently but remains
low compared to other countries.
While certain population groups were
hard hit by the crisis, it does not seem
to have increased income inequality
in the longer-term.
The GC was around 28 during the
1980s, then fell from 28.7 in 1990/1 to
26.3 in 1996/7. It rose again however
(during the period of economic
stagnation) to 29.6 in 1998/9.
Income inequality appears to have
increased between 1996 and 1999,
when the ratio of the income of the
top quintile to the bottom increased
from 7.3 to 8.9. GC estimated at 36.1
in 1998.
Poverty
Incidence of poverty was relatively
stable from 1983/4 to 1991/2, then fell
significantly until 1995/6 since when
the rate of poverty reduction has
slowed.
Income poverty fell from around 31%
in 1990 to 17% in 1999 continuing a
trend of rapid poverty reduction since
economic reform began in 1978.
After a long period when the income
poverty rate showed no trend, poverty
fell significantly from the 1970s to the
mid-1980s. There is a debate over
interpretation of date for the 1990s
but it appears that the income poverty
rate fell between 1993/4 and
1999/2000 from around 36% to 29%
on the national poverty line measure
(alternative estimates are 39% to
34%).
Poverty fell from 28% in the mid1980s to around 8% in the 1990s,
before rising to 18% in 1996 and 24%
in 1998. Poverty fell again sharply as
growth recovered in 1999 and 2000,
back to 10% by late 1999.
The poverty headcount rate fell
steadily from 46% (national poverty
line) in 1984/5 to 28.6% in 1993/4.
However it has subsequently risen to
32.6% by 1998/9.
The poverty headcount is estimated
to have fallen from around 75% in
1990 to 58% in 1993, 37% in 1998,
and 32% in 2000.
Several common factors across countries appear to underlie this shift to relatively less propoor growth:
•
The first phase of rapid economic growth was associated with the removal of severe
policy biases against agriculture in China and Vietnam (and to a lesser extent in
Indonesia) in the context of a highly egalitarian land distribution, enabling a wide
sharing of the benefits of growth.
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•
Subsequently the agriculture sector has tended to lag and the driver of growth has
been manufacturing exports (or service exports in some parts of India). The direct
benefits of this growth have been concentrated in urban areas, and the better educated
and more mobile have been better able to take advantage of the opportunities created.
•
As a result, growth is currently associated in particular with rapidly increasing subnational disparities for example between Coastal versus Inland and Western provinces
of China, the South and West of India versus the North and East, and the Red River
Delta and South East (around Ho Chi Minh City) versus Highland and Central areas
in Vietnam. These disparities reflect in particular ease of access to markets and
educational levels.
A question of central importance is whether the relatively unfavourable pattern of growth
from the point of view of poverty reduction is likely to continue or whether trends towards
increasing inequality will be stopped or reversed.
Table 13 presents a selection of data from the World Income Inequality Database (WIID) on
trends in the GC for other rapidly growing Asian economies at earlier stages in their growth
process. South Korea and Taiwan have had and have maintained relatively equal income
distributions. In Taiwan inequality generally declined from the early 1960s until the mid
1980s, and then increased into the 1990s mildly. In South Korea income inequality appeared
to increase during the 1970s and fell again in the next decade. In Thailand income inequality
appears to have increased from the early 1980s to 1992, but has subsequently fallen. For
Malaysia income inequality appears to have increased between the mid 1950s and mid 1970s,
then declined subsequently before remaining approximately constant in the early 1990s.
This suggests that rapid growth can be sustained without increasing inequality. However,
drawing comparisons between these economies and the much larger ones (in population and
geographic area) that are the focus of this paper requires care. In each of these four countries
most of the population is located close to centres of growth and access to export markets is
good reflecting long coastlines, high population density and generally good internal
communications. Where there are exceptions that approximate more the conditions of
countries with large inland populations dependent on agriculture and remote from the main
centres of urban growth, as in Northern Thailand, growth has indeed been notably unequal.
Table 13:
Trends in Inequality in Selected Rapidly Growing Asian Economies
South Korea
1965
34.3
1970
33.3
1976
39.1
1982
35.7
1980
1985
1988
38.6
34.5
33.6
1964
1970
1974
1980
1985
1990
Taiwan
36.0
32.1
31.9
27.7
29.0
31.2
1957
1967
1970
1976
1979
1984
Malaysia
42.1
48.3
49.8
53.0
51.0
48.0
1989
1995
48.4
48.5
1981
1986
1988
1990
1992
Thailand
47.5
50.4
48.8
50.8
54.8
1992
1996
1998
44.5
42.9
42.1
Sources: WIID: S.Korea (1965–82 Martellaro, 1980-88 NBS); Taiwan (HH Survey Series);
Malaysia (1957-1970 Dowling; 1970-1984 Bruton, 1989-95 World Bank);Thailand (1981-92
Ikemoto, 1992-8 CSO).
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4.
Performance against Other Millennium Development Goals
Table 14 provides information on indicators of performance against the MDGs, other than
those associated with income poverty. The most striking feature is the marked regional
difference: China, Indonesia and Vietnam fare markedly better on practically all indicators
than the South Asian countries – even though in per capita income terms Vietnam is no richer
than South Asia. However, the aggregate figures mask extremely high levels of variation
within countries (discussed in more detail in the Country Annexes).
•
Primary enrolment and youth literacy is well over 90% in the East/South East Asian
countries. While there is evidence of improvement over the 1990s, South Asia lags far
behind, though with India ahead of Pakistan and Bangladesh. Some Indian states
however have indicators comparable to or better than those of East/South East Asia.
•
Similarly, the level of gender equality in education is far higher in East/South East
Asia, with India ahead of Bangladesh and Pakistan.
•
Strikingly, Vietnam has generally the best indicators on child mortality, ahead of
China (where there was little improvement over the 1990s despite rapid economic
growth), followed at some distance by Indonesia and the South Asian countries.
During the 1990s Bangladesh made considerably more progress in reducing child
mortality than did Pakistan, from a similar base.
•
Contraceptive prevalence is highest in China, and at similar levels for Bangladesh,
India and Indonesia, with Pakistan lagging behind (information not available for
Vietnam). Only limited data is available on HIV infection rates – UNAIDS estimated
4 million infected in India and 1 million in China in 2000.
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Table 14:
Millennium Development Goals
Universal Primary Education Indicators
Net primary enrolment ratio (% of relevant age group) 1990
Percentage of cohort reaching grade 5 (%) 1990
Youth literacy rate (% ages 15- 24) 1990
Bangladesh
64.0
Net primary enrolment ratio (% of relevant age group) 1999
Percentage of cohort reaching grade 5 (%) 1999
Youth literacy rate (% ages 15- 24) 1999
Gender Equality and Education
Ratio of girls to boys in Primary and Secondary Education (%) 1990
Ratio of young literate females to males (% ages 15- 24) 1990
Share of women employed in the non agricultural sector (%) 1990
Ratio of young literate females to males (% ages 15- 24), 1999
43.6
China
97.4
86.0
94.7
India
Pakistan
Vietnam
64.3
Indonesia
97.5
83.6
95.0
47.4
95.0
50.7
93.2
97.3
97.8
59.7
72.6
97.7
57.0
97.0
Bangladesh
72.5
59.1
14.6
China
81.1
94.3
India
67.8
73.9
Indonesia
90.7
96.7
38.4
Pakistan
46.8
49.0
6.6
Vietnam
65.4
97.3
81.3
98.8
58.9
100.4
China India
47.0 112.0
38.0
80.0
98.0
56.0
Indonesia
83.0
60.0
57.5
Pakistan
138.0
110.4
50.2
Vietnam
54.0
40.0
85.0
99.2
Child Mortality Indicators
Under 5 Mortality rate (per 1,000) 1990
Infant Mortality Rate (per 1,000 live births) 1990
Immunization, measles (%) of Children under 12, 1990
Bangladesh
136.0
90.6
65.0
Under 5 Mortality rate (per 1,000) 1999
Infant Mortality Rate (per 1,000 live births) 1999
Immunization, measles (%) of Children under 12, 1999
82.6
60.0
71.0
39.5
32.0
90.0
87.7
69.2
50.0
51.4
40.9
70.9
110.3
83.3
54.0
34.2
27.5
Maternal Health Indicators
Births attended by skilled health staff (% of total), 1990
Bangladesh
7
China
India
44
Indonesia
47
Pakistan
40
Vietnam
95
HIV AIDS Indicators
Contraceptive prevalence rate (% of women ages 15- 49), 1990
Contraceptive prevalence rate (% of women ages 15- 49), 1999
Incidence of Tuberculosis (per 100 000 people), 1999
Bangladesh
39.9
53.8
241.0
China
India
44.9
83.0
51.8
103.0 185.0
Indonesia
49.7
57.0
282.0
Pakistan
14.0
27.6
177.0
Vietnam
20
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5.
Growth and Income Poverty Scenarios
Growth Scenarios
Table 15 shows the Baseline and High Growth projections that have been used in developing
poverty reduction scenarios. The basis of the assumptions underlying these projections is
discussed in more detail in the Country Annexes.
Table 15:
Country
Growth Scenarios
Bangladesh
Baseline
Growth
Scenario
3.5%
China
5.0%
India
3.3%
Indonesia
3.0%
Pakistan
1.5%
Vietnam
4.6%
Source of Baseline
Average 1997-2001
Sustaining current
growth rates seen as
problematic over
medium term
because of
demographic
changes and
reduced scope for
growth from
liberalisation alone.
Average 1997-2001
High
Comments
Growth
Scenario
6.0%
Assumes successful
acceleration to recent
Chinese growth rates
6.8%
Average 1997-2001
6.0%
Slow recovery
projection
Average 1997-2001
was 0.6%.
6.0%
Average 1997-2001
6.8%
4.0%
Assumes successful
acceleration to recent
Chinese growth rates
Rapid recovery projection
Approximates current
performance of other
South Asian countries
Achieves current Chinese
levels of growth
For Bangladesh, India, and Vietnam, the Baseline Growth Scenario is a continuation of the
average rate of per capita growth achieved in 1997-2001. High growth scenarios are based on
a move towards the rates of growth achieved recently by China – assumed to be feasible over
the whole of the period for Vietnam with its higher current growth performance, and
requiring some period of acceleration for Bangladesh and India. For China, the 1997-2001
performance is taken as the high growth scenario, with the baseline discounting this rate
somewhat. The assumptions for Pakistan and Indonesia are less firmly based on current
performance. For Indonesia, the baseline projection is of a relatively modest rate of overall
economic recovery, in line with actual growth in the immediate post-crisis period. The high
growth scenario is the same as that for Bangladesh and India. For Pakistan, where per capita
growth has been stagnant over the last 5 years, the baseline is of a modest per capita growth
rate of 1.5%. The high growth scenario involves acceleration to 4% - in line with but
somewhat above the rates achieved recently by Bangladesh and India.
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These scenarios are broadly in the range of the projections included in Global Economic
Prospects 2003, which envisage a lower rate of per capita growth in East Asia and Pacific
(dominated by China) to 2015 compared to the 1990s, while growth in South Asia is
projected to increase compared to the 1990s (Table 15).
Table 16:
Projected Growth in Per Capita GDP
All Developing Countries
East Asia and Pacific
South Asia
1980s
0.7
5.6
3.4
1990s
1.6
6.4
3.3
2001-5
2.4
5.1
3.5
2006-15
3.5
5.4
4.0
Source: GEP 2003.
Growth and Poverty Reduction
The Growth-Elasticity of Poverty Reduction (GEPR) may be defined as the percentage
change in the poverty headcount ratio in response to a one per cent increase in income. The
appendix discusses some methodological and empirical issues about the GEPR. The main
points to be made are:
•
The GEPR (for a constant level of inequality) depends negatively on the level of the
poverty line in relation to average income and on the level of income inequality.
•
Empirical estimation of the relationship will be sensitive to the definitions of income
or consumption used – for instance the elasticity in relation to GDP will be lower than
in relation to household consumption measured from surveys.
•
Empirical estimates of the GEPR vary widely for periods of growth in different
countries (and between different parts of the same country for instance between
Indian states) and times, with changes in inequality explaining most of the variation.
For the purpose of developing scenarios, it has been assumed in general that the relationship
between poverty reduction and growth will be similar to what has pertained during the most
recent sustained growth period for which data is available – and so that trends towards
increasing inequality will continue. For Bangladesh and China, baseline estimates reflect
performance during the 1990s. For India, the baseline reflects the growth until the early
1990s – although the performance during the 1990s was significantly worse. In each case the
high scenario elasticity has been set 50% higher. Indonesia, Pakistan and Vietnam have a
higher measured response to growth over the most recent growth period. This has in each
case been discounted to give a baseline one-third lower.
It should be stressed that the empirical basis for these estimates can be questioned, although
the scenarios chosen are certainly within the range of empirical plausibility, though arguably
(with the possible exception of India) on the low side, given the expectation that the GEPR
should increase with average income. An important extension of the analysis would be to
make explicit the assumptions about trends in inequality and use more fully information on
the shape of the distribution of income.
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Table 17:
Country
Baseline Growth-Elasticities of Poverty Reduction
Bangladesh
Baseline
Estimate
-0.80
China
-0.70
India
-0.75
Indonesia
-0.92
Pakistan
-1.10
Vietnam
-0.93
Basis of Calculation
From 1990 to 2000, extreme poverty fell from
42.7% to 33.7%, a fall of 2.35% per annum,
while per capita GDP grew at 3.0% per annum,
an implied elasticity of -.78 (OPM, 2002).
Chen and Wang (2001) show per capita GDP
rose 9.2% per annum from 1990-9 while the
poverty headcount index fell from 31.5% to
17.4% - that is 6.4% per annum. That is an
implied elasticity of about –0.7.
Estimate based on Datt and Ravallion for the
period before the 1990s.
Estimate of –1.38 from Warr (2001) for the
period 1976-99 used as high elasticity,
discounted to give baseline.
From 1984/5 to 1993/4 poverty incidence fell
from 46% to 28.6%, 5.1% per annum while
average growth was 3.1%. This implies an
elasticity of –1.65 which has been used as the
high elasticity, discounted to -1.1 as the
baseline. Poverty increased from 1993/4 to
1998/9 while per capita growth stagnated.
Ausaid (2002) suggests 1990-8 headcount
poverty fell 8.5% per annum while per capita
growth was 6.1%. Implied elasticity of –1.4. This
is used as the high rate with the baseline
discounted to -0.93.
Results of the Scenario Analysis
The results of the scenario analysis are presented in Table 18. For each country there are four
scenarios, using the combinations of the baseline and high growth and elasticity estimates.
The main features of the results are:
•
In all cases except India and Pakistan, the baseline (most pessimistic) scenario would
imply achievement of the MDG of halving income poverty between 1990 and 2015.
All the more optimistic scenarios would see this target achieved. For India, the
baseline scenario would see very little change in the aggregate number of poor people
by 2015.
•
The baseline would result in aggregate in the number of poor in the six countries
falling from 788 million in 1999 (28.3%) to 609 million in 2015 (18.4%). Under the
high scenario the figure would be 298 million (9.0%). In each case India’s share of
the poor would increase (and would have the highest poverty rate), and China would
still have more poor than the other four countries combined.
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Table 18:
Results of the Scenario Analysis
Bangladesh
Poverty Headcount in 1999
Poverty Headcount in 2015
Baseline Elasticity and Growth
Baseline Elasticity, High Growth
High Elasticity, Baseline Growth
High Elasticity and Growth
%
29.1%
Number (m)
37
18%
13%
15%
9%
30
21
24
14
China
Poverty Headcount in 1999
Poverty Headcount in 2015
Baseline
Baseline Elasticity, High Growth
High Elasticity, Baseline Growth
High
%
18.8%
Number (m)
234
11%
9%
8%
6%
148
120
110
80
India
Poverty Headcount in 1999
Poverty Headcount in 2015
Baseline
Baseline Elasticity, High Growth
High Elasticity, Baseline Growth
High
%
42.0%
Number (m)
417
28%
20%
23%
14%
344
246
281
168
Indonesia
Poverty Headcount in 1999
Poverty Headcount in 2015
Baseline
Baseline Elasticity, High Growth
High Elasticity, Baseline Growth
High
%
12.9%
Number (m)
27
8%
5%
7%
3%
21
13
16
8
Pakistan
Poverty Incidence in 1999
Poverty Incidence in 2015
Baseline
Baseline Elasticity, High Growth
High Elasticity, Baseline Growth
High
%
32.6%
Number (m)
44
25%
16%
22%
11%
49
31
42
21
Vietnam
Poverty Incidence in 1999
Poverty Incidence in 2015
Baseline
Baseline Elasticity, High Growth
High Elasticity, Baseline Growth
High
%
37.0%
Number (m)
29
18%
13%
13%
8%
17
12
12
7
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The baseline projects the trends of the 1990s in terms of both growth and the relationship
between growth and poverty reduction that imply increasing income inequality. Exceptions
are for Indonesia which suffered economic crisis during the decade, and China where the
baseline view is that current growth rates will not be sustained.
The main point to come through from the scenario analysis is that the translation of rates of
economic growth that are high by past standards will not be sufficient to eliminate poverty
(though for most countries it will achieve the MDG of halving income poverty by 2015
compared to the 1990 baseline) unless the growth path becomes significantly more pro-poor
than it appears to have been during the 1990s. This generally requires a sub-national pattern
of growth which is much more favourable to those areas that have tended to lag during the
1990s. As noted above, economic growth in Asia has not necessarily been associated with
increasing inequality, but this has usually been in contexts where growth has either been
associated with a strong agricultural performance, or has taken place in relatively small
countries with internally well-integrated economies.
Several downside risks could also be identified that would need to be explored in a fuller
scenario analysis. The experience of the 1990s in South East Asia suggests that a major threat
to economic stability has been the fragility of an imperfectly regulated financial system prone
to generating bad debt, exacerbated by the threat of capital flight as the capital account is
liberalised, though South East Asian economies have generally (with the exception of
Indonesia) recovered strongly from the financial crisis. The Chinese and Indian financial
systems remain inefficient and in need of reform but this process will need to be carefully
managed to ensure that systemic fragility is reduced rather than increased through the reform
process.
Other potential downside risks include a continuation of the economic recession in Japan,
severe and sustained economic downturn in the United States, which has generally been the
most dynamic export market. However, the other main source of risks relates to the political
environment, specifically whether governments are able to carry through sustained economic
and social reforms, and in particular to act to reduce sub-national inequalities that may
become a source of political tensions.
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6.
Factors Affecting Growth and Poverty Reduction Prospects
Several issues emerge as of particular importance for the growth and poverty reduction
prospects of the major countries of developing Asia:
•
Rapid economic growth in the 1990s has generally been associated with increasing
inequality and hence a declining relationship between growth and poverty. This is the
result principally of widening divergences between the rapidly growing (often coastal)
areas that are increasingly strongly integrated into the world economy, where
education, other social indicators and the quality of infrastructure are markedly better,
and inland areas that are predominantly rural and backward in social indicators. The
livelihoods of the poor are still disproportionately dependent on agriculture. The
agricultural sector has grown relatively slowly and its further growth prospects are not
bright. The poverty impact of continuing growth depends crucially on the extent to
which ways of broadening its benefits to lagging areas can be achieved through
mechanisms including migration, consumption and production linkages, and fiscal
equalisation.
Some Reasons Why India Grows More Slowly than China …
•
•
•
•
•
•
China’s savings and investment rates have been far higher than India’s for decades.
Integration with the world economy has become far deeper in China than India – especially
due to openness to foreign ownership and creating conditions to attract FDI to export
production.
There is no counterpart in India to the dynamism of Township and Village Enterprises (at
least outside investment in service exports)
The reservation in India of important sections of manufacturing for small-scale producers
has limited investment and the scope for productivity improvement.
Indian agriculture yet to be reformed systematically – insulated from world markets and
discriminated against by policy interventions.
India has failed to reform and attract investment to the power sector.
… and Why Growth Has Been More Pro-Poor in China
•
•
Indian socio-economic system has limited scope for disadvantaged regions to catch up with
coastal South and West, especially because of differentials in education which are far higher
than in China.
Agricultural growth has been far faster in China throughout the post-reform period and land
distribution has been more equal.
Sources: Srinivasan (2002), Acharya (2002), Fan (2001)
•
South Asia’s economic performance, which has improved in the 1990s in Bangladesh
and India (though deteriorating in Pakistan), still significantly lags that of East Asia.
The prospects for a breakthrough that could largely eliminate severe poverty in Asia
depend principally on the prospects that India could match China’s growth
performance over the 1980s and 1990s – implying rates of per capita growth that are
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up to 5% higher than what India is currently achieving. Several studies have
investigated the comparative performance of China and India, and identified both
economic policy and deeper social reasons why India’s growth has been slower.
•
Although there is evidence of some catch-up over the last decade, social indicators for
South Asia still lag far behind those of East Asia, with the gender gap particularly
large. In China and Indonesia, the rate of improvement of social indicators has slowed
markedly and there is evidence that sub-national differences are widening. Education
access and quality emerges as of particular importance in determining the extent to
which the poor are equipped to exploit economic opportunities.
•
Manufacturing exports have been the principal engine of growth and mechanism for
increasing integration into the world economy in all of the economies. Partial
exceptions are Vietnam where agricultural exports remain important, Indonesia where
oil remains a principal export earner, and India where service exports have been a
major force for integration into the world economy in the most dynamically
performing parts of the country. Exports have become increasingly oriented towards
North America in particular and the WTO is becoming a shaping force for domestic
policy. Reforms to improve market access for agricultural imports, services, and
greater protection of intellectual property rights, are likely to be required in order to
protect and enhance market access for Asian manufactures.
•
There are reasons to doubt whether China will be able to sustain the exceptionally
high levels of investment and saving that have persisted over many decades and have
been an important factor in explaining its growth performance. The major one is
demographic – China’s population is aging compared to those in South Asia as the
result of an earlier demographic transition. However, China’s strong performance in
attracting foreign direct investment makes its growth less dependent on savings
performance than is the case in South Asia where FDI remains negligible in
macroeconomic terms. An improvement in the investment environment for both
domestic and foreign investors will be required for South Asia to achieve accelerated
growth – but a shift towards higher savings and investment will also be required.
The emerging picture of the growth process in developing Asia is one in which in general the
opportunities for rapid growth from the removal of policy-based constraints (especially on
agriculture) are shrinking. Experience has shown that liberalisation measures (improving the
terms of trade for peasant producers and opening to foreign trade) have fostered rapid growth
that is strongly pro-poor, especially where there has been effective land redistribution in the
past and widespread investment in education and basic health. In the next phase, these
countries have to varying degrees been able to exploit their comparative advantage in labourintensive manufacturing. This pattern of growth has been rather less pro-poor than rural based
growth, particularly since it tends to be concentrated in urban areas, though where rural
infrastructure is good and rural-urban economic linkages strong, rural areas have been able to
benefit (as in Southern China). South Asia, because of its relatively poor record in education
and in providing an enabling environment for private investment, still has opportunities for
increasing labour-intensive manufacturing production if these policy-related constraints (for
instance in the power sector in India) can be overcome.
A hypothesis is that the next stage of growth appears to be based around increasing the skillsintensity of manufacturing and services, as labour costs increase, and as quality requirements
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to maintain market share in international markets continue to rise. This requires a high quality
of infrastructure, and an increasingly highly trained and educated workforce. Again, the
opportunities for the poor to engage directly in these sectors are likely to be limited in the
short-term, and it will be the extent of the production and consumption linkages (for instance
the extent to which domestic agriculture will be able to supply the consumption needs of the
booming cities of Southern China and Southern and Western India) that will be of critical
importance in determining the poverty impact of growth.
The trend towards increasing sub-national inequality is likely to cause or exacerbate political
tensions in a number of countries. The extent to which these tensions can be accommodated
without political unrest or economic disruption – especially where ethnic or religious frictions
are already causing political unrest as in Indonesia and some parts of India – is one major
source of risks that might jeopardise growth. The conflict between India and Pakistan poses
particular risks. The exceptionally heavy drain on the Pakistani economy caused by
attempting to sustain military spending to match India (and the attendant militarisation of
politics) is likely to be a significant factor in Pakistan’s poor economic performance.
The first (and probably most significant) area of international action that might affect growth
and poverty reduction prospects relates to the process of negotiating enhanced market access
for Asia’s manufacturing and (increasingly) service exports to the developed country markets
that are the principal export destination for these economies.
The second area of potential international action relates to development assistance. While aid
is of great macroeconomic importance in Bangladesh and Vietnam (more than 20% of
government spending), and of significant importance to Indonesia (particularly in relation to
the heavy debt burden Indonesia faces) and Pakistan, it is currently of minor importance for
both China and India. India remains extremely under-aided by comparison with other
countries given its level of poverty and its relatively favourable policy environment.
This paper has identified the main trends in growth and poverty in Asia and explored their
implications for the achievement of the Millennium Development Goals. The following
issues emerge as meriting further analysis:
•
The nature of linkages within economies, especially the routes by which growth
elsewhere in the economy might create opportunities for the rural poor.
•
More sophisticated and deeper analysis of the poverty-growth-inequality relationship
at the national and sub-national level.
•
Analysis of the implications of WTO commitments for domestic policy, and the scope
over time for expanding regional trade.
•
The political economy of economic policy-making and of growing sub-national
inequality.
28
Trends in Poverty and Growth in Asia
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Appendix: The Growth-Elasticity of Poverty Reduction
The validity of assumptions about the empirical relationship between economic growth and
the rate of poverty reduction is of central importance for developing scenarios to judge
whether the income poverty MDGs are likely to be attained. The Growth Elasticity of
Poverty Reduction (GEPR) may be defined as the percentage change in the poverty
headcount rate for a one percent change in GDP. There is a large empirical literature that
analyses this relationship using alternative measures of poverty. For instance the well-known
study by Dollar and Kraay (2002) concludes that on average a 1% increase in average income
is associated with a 1% increase in the income of the poor.
The general finding though (as with the Dollar and Kraay study) is that there is a high level of
variation in the relationship across countries and to some extent across time. For example,
Ravallion finds an average growth elasticity of –2.075 for a wide range of developing country
experience in the 1980s and 1990s, but with a high level of variation. Much of the additional
variation in poverty impact is explained by changes in inequality - Ravallion notes that
among countries in which inequality has tended to rise since the late 1980s are Bangladesh,
China, India and Vietnam (by comparison with Jamaica, Tunisia, the Philippines and Ecuador
where inequality has tended to fall).
Warr (2001) quotes the following estimates (evaluated at sample means) for a selection of
Asian countries:
India
Indonesia
Taiwan
Malaysia
Thailand
Philippines
–0.92
-1.38
-3.82
-2.06
-2.04
-0.73
(1957-92)
(1976-99)
(1964-95)
(1976-95)
(1969-99)
(1965-97)
Datt and Ravallion (2002) calculate an estimate of -0.75 for India for the period 1958-91.
They argue that that poverty in fact fell by 0.8% per annum over the 1990s when this
historical elasticity would have predicted a fall of 1.3% per annum, so that while the 1990s
were associated with higher growth, this growth became less pro-poor. The elasticity implied
for the 1990s is therefore about –0.45. However other estimates of the reduction in poverty
during the 1990s appear to be higher than the figures used by Datt and Ravallion. So the
baseline used here is there estimate for the earlier period.
There are a number of issues that will affect the calculation of elasticities that can be used in
the development of scenarios. For example, elasticities that are based on comparisons over
time of household consumption or income data are likely to yield higher estimated elasticities
between poverty and mean income than will estimates of the relationship between GDP
growth (or average GDP per capita) and poverty, since household consumption is only one
element of GDP.
Bourguignon (2002) examines the empirical literature on the GEPR. He analyses the
relationship between income growth from consumption surveys and the poverty headcount
5
That is, 1% increase in average household income yields a 2.07% reduction in the poverty headcount rate.
29
Trends in Poverty and Growth in Asia
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ratio for a sample of 114 growth periods using a simple regression yields an average elasticity
of –1.6, but find that this only explains 26% of the variation. He notes that much of the
empirical literature that seeks to estimate the relationship between economic growth and
poverty reduction fails to take account of the fact that mathematically an identity relationship
links the rate of growth, poverty reduction and inequality. Using an empirically justified
simplifying assumption that the distribution of income or consumption expenditure tends to
be Log-normal, the explanatory power of the model is increased (since in effect the whole of
the distribution of incomes is represented). The GEPR may be defined as the relative change
in the poverty headcount for a one percent growth in mean income, for a constant level of
relative inequality. The functional form has the immediate implication that the growth
elasticity will be an increasing function of the level of average income, and a decreasing
function of the relative income inequality.
The relationship can be presented graphically by curves in the development-inequality space
along which the growth elasticity of poverty is constant. This implies that in a relatively poor
country where average income is only twice the poverty line, the growth-elasticity will be
around 3 (in absolute value) if inequality is relatively low (e.g. GC around 30), but will fall to
around 2 if the GC is 40. If the economy gets richer relative to the poverty line the elasticity
increases, but becomes more sensitive to the level of inequality. Bourguignon notes that
growth elasticities consistent with the log-normal assumption will be around 5 for a country
like Indonesia which was relatively well-off compared to the poverty line and relatively equal
to 3 for a country like India which had a similar income distribution but only half the average
income.
As noted above, the tendency over the 1990s in most of the countries considered here has
been for inequality to increase as growth has accelerated and in particular as the performance
of the agricultural sector has tended to lag rather than drive growth as it has in the past. A
critical issue for the development of poverty reduction scenarios is whether this tendency
towards increasing inequality is likely to continue.
For the purpose of developing baseline scenarios, it has been assumed that the relationship
between poverty reduction and growth will be similar to what has pertained during the most
recent sustained growth period for which data is available – and so implicitly that trends
towards increasing inequality will continue. This may be seen as a somewhat pessimistic
assumption, particularly given that the elasticity should tend to increase for a fixed poverty
line as average income increases. However it does not seem an inappropriate one for a
baseline reflecting current trends, given in particular the evidence of increasing sub-national
inequalities associated with rapid overall growth in most of the countries. The high poverty
impact scenarios have used a GEPR6 set 50% higher in real terms than the baseline, except
for India where the high elasticity estimate in 0.9, in line with estimations for earlier growth
periods. It should be emphasised that no attempt has been made here to estimate the
elasticities econometrically, or to develop an explicit set of assumptions about the shape of
the distribution function along the lines suggested by Bourguignon (2002), including making
explicit the assumptions about trends in inequality.
6
Note that the definition of the GEPR used here is not conditional on a given income distribution as in
Bourguignon (2002) but incorporates implicit assumptions about future trends in inequality. A more complete
analysis would explicitly model changes in the income distribution and use a (higher) conditional GEPR.
30
Trends in Poverty and Growth in Asia
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References
Acharya, S., (2002), India’s Medium-Term Growth Prospects, Economic and Political
Weekly, July 13.
ADB, (2002), Asian Development Outlook, Asian Development Bank, Manila.
Bourguignon, F., (2002), The growth elasticity of poverty reduction: explaining heterogeneity
across countries and time periods, Delta and The World Bank.
Cassen, R.H., (2002a), Twenty-first Century India: Population, Environment and Human
Development – Overview, draft.
Datt, G., and M. Ravallion (2002), Is India’s Economic Growth Leaving the Poor Behind?,
draft May, World Bank.
Dollar D., and A. Kraay (2002), Growth is Good for the Poor, Journal of Economic Growth,
7(3), 193-225.
Fan, S., (2001), Public Investment, Growth and Poverty Reduction in Rural China and India,
International Food Policy Research Institute, Washington DC.
GEP (2003), Global Economic Prospects 2003, The World Bank.
MDG (2002), www.developmentgoals.org.
Ravallion, M., (2000), What is Needed for a More Pro-Poor Growth Process in India?
Development Research Group, World Bank.
Srinivasan, T.N., (2002), China and India: Growth and Poverty, 1980-2000, draft, Yale
University.
Warr, P., (2001), Poverty Reduction and Economic Growth: The Asian Experience, Asian
Development Bank.
WDI (2002), World Development Indicators, Washington: The World Bank Group.
World Income Inequality Database, http://www.wider.unu.edu/wiid/wiid.htm.
31
Trends in Poverty and Growth in Asia
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Annex 1: Bangladesh7
A1.1 Growth and Poverty Reduction Performance
Economic Growth
During the 1990s, the Bangladesh economy embarked upon a liberalization program that
produced good results. Per capita GDP growth averaged about 3 percent per annum (GDP
growth of 4.8 percent) though remains very low at $366 per capita in 2000. Exports
registered an impressive growth of 17 percent per annum, raising its share of GDP from 5
percent in 1973 to about 14 percent in the beginning of 2000. The most dynamic export
sector was ready-made garments (RMG), which now accounts for 75 percent of total exports
and has provided widespread employment to the poor, particularly women.
This overall impressive performance was marred by a deterioration in governance, especially
law and order, and a neglect of the development of critical infrastructure – power, ports, and
telecommunications. The policymaking capacity in the government did not keep pace with
the rapid changes in the global economy. Critical decisions were stalled, such as
privatization, second generation trade reforms, and banking reforms. The economy began to
show signs of strain from 1999.
Figure A1.1: Bangladesh: Growth Performance 1980-2001
Bangladesh - Growth Performance
8
7
6
5
4
3
2
1
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
-1
-2
GDP Growth per capita
Since 1982-6, the agricultural share of GDP has fallen from over 40% to under 25%, while
both industry and services have increased their shares significantly. Despite this, the data
7
This annex is derived principally from OPM (2002).
32
Trends in Poverty and Growth in Asia
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available suggests that the share of employment in industry has fallen markedly, and the
agricultural share of employment appears actually to have increased, although as noted in the
main text, this figure should be treated with caution. The share of exports in GDP has
doubled over the 1990s, and both savings and investment have greatly increased their shares
of GDP though these are still low compared to East Asia. Foreign direct investment has been
insignificant until the last period.
Table A1.1:
Indicators of Structural Economic Change
19821986
40.7
16.4
42.9
19871991
35.1
17.5
47.4
19921996
25.7
23.1
51.2
19972001
24.5
24.5
51.0
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
57.9
11.7
25.6
65.7
14.2
15.5
63.2
9.6
25.0
..
..
..
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
7.0
0.0
1.7
13.3
0.0
7.2
0.0
6.2
14.4
0.0
9.6
0.0
12.9
18.6
0.0
13.6
0.4
16.4
22.1
0.4
Bangladesh
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
The share of exports accounted for by agricultural raw materials and food has fallen from
over a third in 1982-6 to 10% in 1997-2001, with manufactures (dominated by garments)
now accounting for 90% of exports.
Table A1.2:
Structure of Merchandise Exports and Growth of Total Exports
Bangladesh
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
Export growth (% per annum)
1982-6
1987-91
14.1
19.4
2.3
63.8
0.0
3.7
8.2
15.9
1.2
74.6
0.0
13.4
1992-6 1997-2001
2.9
11.4
0.6
84.7
0.0
16.1
2.2
7.8
0.3
89.5
0.0
11.4
Poverty and Inequality
Overall, poverty in Bangladesh has declined since the country achieved Independence in
1971. Poverty trends suggest that considerable progress in social/human development
dimensions of poverty has been achieved with a modest decline in income poverty.
Analysis of household data sets indicates that the incidence of poverty was relatively stable
from 1983-84 to 1991-92, and then experienced a statistically significant decline until 199596. Over the last five years, however, the rate of poverty reduction has slightly slowed. The
incidence of poverty declined at a rate of 0.9 percent per year over the last two decades.
33
Trends in Poverty and Growth in Asia
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Similar trends over time can also be found in the “distributionally sensitive” measures of
income poverty such as the depth and severity of poverty – stagnation in poverty during the
1980s and a decline in the 1990s. Trends in Gini coefficients suggest that inequality in
Bangladesh increased over the last two decades. Inequality was relatively stable in the 1980s,
increased between 1991-92 and 1995-96, and did not change much in the second half of the
1990s. Chart A1 provides a comparative look at the inequality and income poverty trends
over the last two decades8.
0.35
60
58
56
54
52
50
48
46
44
0.3
0.25
0.2
0.15
Gini
percentage
Figure A1.2: Trends in Poverty Incidence and Inequality
Head-count rate
Gini
0.1
0.05
0
1983-84 1988-89 1991-92 1995-96
2000
Source: World Bank (1999). Figures for 2000 are preliminary World Bank estimates
Throughout the last decade, the incidence of poverty in rural areas remained higher than in
urban areas. Between 1991/92 and 1995/96, both urban and rural poverty declined, but over
the second half of the 1990s the former increased while the latter continued its declining
trend. The net result has been a roughly equal decline in poverty across the two sectors over
the last decade though rural areas had better progress in reducing the depth and severity of
poverty. Despite progress in rural areas, 85 percent of the poor continue to reside in rural
areas. Poverty in rural areas remains much higher than the national average, and the rate of
severity of extreme poverty in rural areas remain twice as high as in urban areas (World
Bank, 2001).
8
Two sets of poverty lines identify the very poor (lower poverty line) and the poor (upper poverty line).The
poverty rates used in this report, unless stated otherwise, refer to World Bank estimates of the upper poverty line
based on the cost of basic needs method and the Bangladesh Household Expenditure Surveys (HES) of 198384, 1988-89, 1991-92, 1995-96 and 1999-00. Poverty line estimates are based on a local (reference)
consumption threshold of 2112 calories per person per day. The HES surveys, designed by Bangladesh Bureau
of Statistics (BBS), are the main source of data for the estimation of poverty in Bangladesh. The questionnaire
design, field implementation procedures and sampling followed by BBS make the HES series more or less
comparable over time. According to the World Bank (1999) however, the 1985/86 HES was an exception in
that it had lower quality data compared to other years, and the decline in poverty estimated by HES did not
match the consumption figures obtained from the National Accounts. Figures for 1985-86 are thus not taken into
account in this report. Similar inconsistencies between HES data and the National Accounts have fueled an ongoing debate on the patterns of growth in per capita expenditures over the 1990s. The debate is however
irreconcilable due to the absence of clear evidence in support of either data source, making the HES data just as
reliable as the National Accounts.
34
Trends in Poverty and Growth in Asia
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Table A1.3:
Trends in Poverty and Inequality
1991-92
Headcount Index (P0)
Urban
44.9
Rural
61.2
National
58.8
Poverty Gap (P1)
Urban
12.0
Rural
18.1
National
17.2
Squared Poverty Gap (P2)
Urban
4.4
Rural
7.2
National
6.8
* All figures are based on the upper poverty line. Source: World Bank (2001)
1995-96
2000
29.4
55.2
51.0
36.6
53.0
49.8
7.2
14.5
13.3
9.5
13.8
12.9
2.5
5.3
4.8
3.4
4.9
4.6
Estimates of the various dimensions of human poverty show that the incidence of human
poverty declined faster than income poverty at a rate of 2.8 percent per year over the last two
decades (see Table A1.4). Some of the improvements in non-income dimensions of poverty
have set Bangladesh apart from its South Asian neighbours:
•
First, the Total Fertility Rate declined at a rate of 2.1 percent per year between 1975
and 1997 – the highest rate of decline among South Asian countries.
•
Second, there has been an impressive decline in child mortality rates with the rate of
reduction in under-five child mortality being 2 per cent per year between 1970 and
1997. The figure is higher than the South Asian average of 1.8 per cent per year over
the same period.
•
Third, significant progress has been made in reducing child malnutrition, evidenced
by better preventive (vaccination coverage) and promotive (greater access to
information on nutrition and safe drinking water9) health care indicators as well as
anthropometric measures on stunting and wasting.
•
Last but not least, progress has been achieved in adult literacy and primary education,
both in overall numbers as well as in closing the gender gap.
9
There is evidence of arsenic contamination in what was considered safe drinking water in many areas, thereby
requiring some qualifications in achievements in access to safe drinking water.
35
Trends in Poverty and Growth in Asia
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Table A1.4: Performance Against Millennium Development Goals
!"#
$&%'%)(
$.-/"02143 507698:8!;!6</"8>=?8A@2B!C28)/D6FE:0'G1IH'J)GK>8'/
$&%'%+*
, ('()(
$&%'%)%
2015 target = halve 1990 $1 a day poverty and malnutrition rates
Population below $1 a day (%)
Poverty gap at $1 a day (%)
Percentage share of income or consumption held by poorest 20%
Prevalence of child malnutrition (% of children under 5)
Population below minimum level of dietary energy consumption (%)
,[ 57H'3Y87C8AJ>G'3 C8'/"\0']>@>/^3_=.0'/`E:821aJ5b0!6c3YB)G
LML
LML
LML
VR2L S
X!R2L Z
VdW4L Z
LML
W>XL V
Net primary enrollment ratio (% of relevant age group)
Percentage of cohort reaching grade 5 (%)
Youth literacy rate (% ages 15-24)
egf /"B'=hB&698:K>8'G21'8'/i82j4J0>]_3 6"E
T&NL_R
RO)LMP
PkW4L V
PbZ'LUX
Ratio of girls to boys in primary and secondary education (%)
Ratio of young literate females to males (% ages 15-24)
Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
lnm 8214J58?5dH)3U]Y1o=.B4/D690>]U3 6"E
NO)LMP
R2L O
S'LUT
R7TL W
LQL
LQL
QL L
QL L
V'P&LUX
X&XL Z
LML
ML L
ML L
W>TLYT
LML
2015 target = net enrollment to 100
LQL
QL L
W>TL Z
TdS'L W
LQL
RZ'L Z
LML
ML L
RZ'LYT
2005 target = education ratio to 100
LQL
V2NL Z
NdZ'L V
LQL
O>R2LUN
VdW4LUT
LQL
LQL
LML
VR2L W
LML
LML
2015 target = reduce 1990 under 5 mortality by two-thirds
PXdV'L Z
O!Z'L V
VR2L Z
Under 5 mortality rate (per 1,000)
Infant mortality rate (per 1,000 live births)
Immunization, measles (% of children under 12 months)
*.pb=o@'/"B!C8.=h0&6^8'/9G20)]H2820'] 6qH
P&PbV'L Z
TW4LMP
TO)L Z
LQL
QL L
TP&L Z
S2NL V
V&Z'L Z
LML
2015 target = reduce 1990 maternal mortality by three-fourths
Maternal mortality ratio (modeled estimate, per 100,000 live births)
Births attended by skilled health staff (% of total)
rhs B)=ot2076uipqviw [ pxzy2{|=?0)] 0)/^3 0?0'G21AB&6<H28'/i1a3 \b802\8\
LML
TL Z
V&Z&Z'L Z
PkW4L Z
LQL
QL L
LML
ML L
2015 target = halt, and begin to reverse, AIDS, etc.
LML
XO)L O
LML
LML
LML
Prevalence of HIV, female (% ages 15-24)
Contraceptive prevalence rate (% of women ages 15-49)
Number of children orphaned by HIV/AIDS
Incidence of tuberculosis (per 100,000 people)
Tuberculosis cases detected under DOTS (%)
} -G\7J)/`8?8'G&C)3Q/"B'G'=.8'G!6^0']&\&J\k6F0)3_G20't>3_]_3 6"E
O)L Z
LML
S'L_R
Z'LMP
O)P&L Z
X&TL Z
LML
Forest area (% of total land area)
Nationally protected areas (% of total land area)
GDP per unit of energy use (PPP $ per kg oil equivalent)
CO2 emissions (metric tons per capita)
Access to an improved water source (% of population)
Access to improved sanitation (% of population)
Access to secure tenure (% of population)
~ x|8&C28']YB'@:0?€] B)t20'] f 0'/D6<G28'/"\&H'3_@"B4/xz87C8>]YB)@>=?8)G76
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NLUN
LML
Youth unemployment rate (% of total labor force ages 15-24)
Fixed line and mobile telephones (per 1,000 people)
Personal computers (per 1,000 people)
‚8)G!8)/"0>]>3_G21a3 5b0!69B)/"\
36
LQL
W'R2L Z
LQL
LQL
LQL
'Z L Z
R7XL S
V'PbZ'L Z
NW4P&L Z
N!R2L Z
LML
ML L
ML L
ML L
ML L
2015 target = various (see notes)
LQL
Z'L S
O)L V
Z'LUN
LQL
LQL
LQL
LQL
Z'L S
PbZ'L S
Z'LUN
LQL
LQL
LQL
PbZ'LYN
LML
LML
LML
OTL Z
R7XL Z
LML
2015 target = various (see notes)
LQL
N L W
Z'LUN
LQL
W4L V
P&L Z
LML
R2L Z
P&LUR
Trends in Poverty and Growth in Asia
Oxford Policy Management
ƒ P&„ Pb… … Z'„ †2L Z‡
ˆ „Xd… … Z'„ †2L V‡
Gross national income ($)
NdS&Z'L Z
GNI per capita ($)
X!R2L Z
Adult literacy rate (% of people ages 15 and over)
W4LMP
Total fertility rate (births per woman)
RbW4L S
Life expectancy at birth (years)
TL Z
Aid (% of GNI)
W4P&L_R
External debt (% of GNI)
PTLMP
Investment (% of GDP)
P‰O)L O
Trade (% of GDP)
y)B4J)/"5b84Š|‹.Œ2cŽ_h’‘'“d‘&ŽQŒ7”4•–‘&—+˜4™‰—4šQ›bœ'˜`Œ^œ'˜#œ2ž>œ2d‘<Ÿa i”+^š_Ž'¡4¢>¢>¡
Population
ƒ P„Nd… … Z „ †!LQ‡P
ˆ „Xd… … S'„ †!L Z‡
X&NdZ'L Z
XdS'LQP
XL W
RS'LYX
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W>NL Z
P‰O)LQP
N&TL O
ƒ P„Nd… … S'„ †!L S‡
ˆ W'„ … … R2„ †!L W ‡
X!RZ'L Z
W2Z'LYT
XLYX
LML
NLYT
XdV'LQP
N&NLYN
XP&L O
ƒ P„X… … P&„ †2LM‡P
ˆ W>„ … … T„ †2L O‡
X&TdZ'L Z
W4P&L W
XLMP
V'P&LUN
NL_R
X&XLUX
N&XL Z
X&XLUN
A1.2 Prospects for Growth and Poverty Reduction
ADB (2002) projects a growth increase to 5.7% in GDP in 2003, following a decline in
growth in 2002 as a result of the impact of global economic slowdown (particularly in the
USA) on export-oriented manufacturing and also slower agricultural growth. The ADB notes
that sustained growth over the medium term requires Government to address structural issues
in the external sector, public finance and banking.
OPM (2002) identified the major reforms to be undertaken to boost growth as:
•
Restoration of macroeconomic balance inter alia through widening the revenue base;
increasing effectiveness in public spending; strengthening management of the budget
cycle; rationalization of prices of public utilities; reforms in the financial sector, including
a secondary market for treasury bills; and greater control by Bangladesh Bank over state
banks to arrest the growth of non-performing loans. There is currently an active debate
between government and the IFIs on the case for, and pace of, liberalization of exchange
rate policy.
•
Structural reforms to focus more comprehensively on restructuring and privatization of
SOEs, comprehensive banking sector reforms, reduction in tariffs and non-tariff barriers,
improved governance in public administration, and tax administration reforms.
•
To meet the challenge of globalization head on and direct it towards poverty reduction,
the following actions are necessary:
(i)
Introduction of second generation trade reform - further reduction and
rationalization of tariffs; diversification of the export base to encourage areas of
potential comparative advantage such as gas, software, agro-industrial products,
horticulture, high-value food items, construction and other services (hotel
management); attracting sizeable non-energy foreign direct investment (FDI)
through a sound investment climate and creating improvements in law and order
and infrastructure facilities.
37
Trends in Poverty and Growth in Asia
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(ii)
To benefit from Bangladesh’s potential comparative advantage in skill-intensive
products and services, investment should be directed towards quality education to
build up skills all across the country. This will promote employment of the poor,
including women.
(iii)
Following a lead from China, Turkey, India, and Lebanon, the Government should
devise plans to involve the Bangladeshi diaspora in the development process. The
process can be jumpstarted by allowing lateral entry in key positions in the
bureaucracy with a combination of higher position and perks. Similarly qualified
resident Bangladeshis should be provided the same incentives. An expatriate task
force could be created to outline the inhibiting factors behind dismal inflow of
FDI from non-resident Bangladeshis. Also, the banking system should be
streamlined to allow more remittances flowing through formal channels.
(iv)
The implementation of the reforms will require a build up of capacity in the
government to implement the reforms.
A1.3 Growth and Poverty Reduction Scenarios
The baseline growth scenario for Bangladesh is based on a continuation of the average rate of
per capita growth for 1997-2001 of 3.5%. The high growth scenario is 6.0% which assumes a
path towards a much more rapid growth rate which is approximately in line with China’s
recent performance. This is significantly higher than past growth performance. The high
growth scenario for Bangladesh used in OPM (2002) is 4%, but this relates to household
consumption rather than GDP.
The baseline elasticity of –0.8 derives from the growth and poverty reduction performance
over the 1990s. OPM (2002) uses a much higher elasticity of –2.56, which is derived from
household surveys. However this figure is not directly comparable because it does not take
account of changes in inequality associated with growth, and relates to household
consumption rather than GDP (for which one would expect the elasticity to be lower in
absolute value).
References
OPM (2002), Bangladesh: Supporting the Drivers of Pro-Poor Change, Report to DFID, June.
World Bank (1999), Bangladesh: From Counting the Poor to Making the Poor Count,
World Bank (2001), Bangladesh Poverty Assessment: Preliminary Report.
38
Trends in Poverty and Growth in Asia
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Annex 2: China
A2.1 Growth and Poverty Reduction Performance
Economic Growth
China has achieved and sustained spectacular rates of economic growth since economic
reforms began in the late 1970s. Growth rates peaked in the early 1990s (following a
slowdown in 1989-90), with per capita GDP growth of 12% for three consecutive years.
Growth rates declined steadily over the 1990s, but averaged 6.8% for the period 1997-2001.
Figure A2.1: China: Growth Performance 1980-2001
China - Grow th Performance
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
0.0
GDP Grow th per capita
While the early stages of economic growth in China were associated with a strong
improvement in the incentives for agriculture, the subsequent growth path has seen
agriculture’s share of GDP fall from 30.8% in 1982-6 to 17.2% in 1997-2001. The share of
services rose rapidly during the 1980s but has subsequently remained approximately constant.
Growth during the 1990s was concentrated in industry, whose share increased from 43% in
1987-91 to over 50% in 1997-2001. The share of the labour force principally engaged in
agriculture fell from 64% in 1984 to 44% in 2001 (ADB, 2002).
Chinese economic growth has been based on very high levels of capital accumulation (rising
from 29% of GDP in the first half of the 1980s to 36% at the end of the 1990s) financed
principally by domestic savings (from 34% of GDP to 41% over the same period). Foreign
direct investment played a limited role in the earlier stages of economic growth but gross
foreign direct investment rose from 0.5% of GDP in 1982-6 to 5.6% in 1992-6 before falling
39
Trends in Poverty and Growth in Asia
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slightly in 1997-2001. A high level of macroeconomic stability has been achieved, with
inflation currently negligible and the fiscal deficit less than 3% of GDP.
Table A2.1:
Indicators of Structural Economic Change
China
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
1982-86
30.8
44.0
25.2
1987-91
25.8
43.0
31.3
1992-96
20.6
47.5
31.9
19972001
17.2
50.3
32.4
9.7
0.4
34.4
29.3
0.5
15.3
1.0
36.6
28.2
1.3
21.4
5.1
41.5
34.8
5.6
23.7
4.3
41.1
35.6
4.9
Source: WDI 2002
Growth has also increasingly been export driven. In 1982-6, exports accounted for less than
10% of GDP. By 1997-2001 they had reached 23.7%. The destination of China’s exports in
2001 was 47.5% to Asia, 27.7% to North/Central America, and 16.0% to Western Europe.
Three export destinations dominated: the USA (24%), Hong Kong-China (19%) and Japan
(15%). The composition of exports has changed dramatically since the first half of the 1980s
from over 50% primary products to 87% manufactured goods.
Table A2.2
Structure of Merchandise Exports and Growth of Total Exports
China
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
1982-6
5.7
15.3
23.0
47.7
2.2
Export growth (% per annum)
8.0
1987-91 1992-6
4.6
1.9
13.6
9.7
8.5
4.2
67.7
82.0
2.6
1.8
16.5
5.8
1997-2001
1.2
6.3
3.0
87.3
2.0
16.2
Poverty and Inequality
The World Bank estimates that the number of people in China below the international
poverty line fell from 360 million in 1990 to 214 million in 1999, so that the MDG of halving
income poverty by 2015 is likely already to have been achieved for China.10 However,
10
An estimated 270 million Chinese were lifted out of absolute poverty in the 1980s and 1990s (Chen and
Wang, 2001). Chen and Wang also estimate that between 1990 and 1999 the headcount index decreased from
31.5% to 17.4%, and that using a lower measure ($0.75 per day) comparable to but slightly higher than the
40
Trends in Poverty and Growth in Asia
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despite this rapid reduction in poverty, growth has during the 1990s been associated with a
significant increase in inequality. The Gini coefficient is estimated to have increased from
0.288 in 1981 to 0.415 in 1995. For the lowest 1% of the population, income increased by an
average of 3% per annum from 1990-9, while for the richest 1% it increased by 11% per
annum. Only for the top 20% did income growth exceed the overall average of 6.9% per
annum (Ravallion and Chen, 2001).
Chen and Wang note that “Income disparities in China come largely from two sources:
income gaps between rural and urban sectors; and those between coastal and inland regions.”
They find that income inequality rose sharply in the first half of the 1990s (the period of most
rapid economic growth) and that income inequality was stable during the relative slowdown
later in the decade. The greatest impact on poverty reduction was during 1993-6, when
policies strongly favoured farm producers (particularly through increases in official prices for
cereals). During 1997-9, real average per capita consumption declined for farmers with the
decline concentrated in poor inland regions such as Gansu, Heilongjiang, Shanxi and
Xinjiang. By comparison, in the early stages of economic reforms (1978-84) income gains
were heavily concentrated in the rural economy with per capita real income of the rural
population increasing by an average of 19.1% per annum over this period. The legacy from
revolutionary reforms of relatively equal land distribution also tended to make agricultural
growth strongly pro-poor.
Tables A2.4 – A2.7 show some of the major dimensions of regional inequality in terms of
GDP per capita, education enrolment and attainment and public spending. Twenty-four
percent of the population live in provinces with a per capita real GDP exceeding PPP$ 5000
per annum while 46% live in provinces where the real GDP is less than PPP$ 2500 per
annum. While enrolment in primary education is near to 100% in all except a few provinces,
inequalities in secondary and tertiary education enrolment and adult literacy rates are marked
and correlated with provincial per capita income. Fiscal expenditure per capita is more equal
than income, but is still substantially above the national average in the five wealthiest
provinces (Shanghai, Beijing, Tianjin, Guangdong and Liaoning).
Lu (2001) recognises three phases of poverty reduction policy in China:
1978-85 based on rural reform policies,
1986-93 as agricultural growth slowed, start of targeted programmes on the economically
backward and national minorities.
1994-2000: target of achieving adequate nutrition and clothing for the whole population,
recognising remaining poor concentrated in remote or ecologically fragile areas.
In 2001 the Chinese State Council issued a white paper on poverty reduction in rural China
which sought to focus direct poverty alleviation measures on “ethnic minority areas, old
revolutionary base areas, border areas and destitute areas in the central and western regions.”
national poverty line the headcount incidence fell from 17.1% to 8.9%, despite slight rises in poverty associated
with the economic slowdown in 1998-9.
41
Trends in Poverty and Growth in Asia
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It is increasingly recognised that past poverty reduction interventions were not sufficiently
targeted (usually only to county level) and so missed many of the poor, and were too
production-focused.
Rozelle likewise argues that “in the past, the broad incidence of poverty made it possible to
achieve substantial reductions in poverty through general economic growth, establishing
linkages through labour and commodity markets, and through programmes that were more
broadly targeted. At present, however, most of the rural poor are concentrated in resource
deficient areas, and comprise entire communities located mostly in upland sections of the
interior provinces of northern, northwestern and southwestern China” and that “the old
strategy based on providing the poor with capital for creating their own economic activities
and/or building them the bridges to the rest of the economy (with road projects), may not
work as well and perhaps not at all. Since the educational, health and nutritional status of
these remaining absolute poor is deplorable, the new strategy must address these questions.
Empirical evidence suggests the central importance of educational investment. From 197095, “sectorally government expenditure on education has the largest impact on both poverty
reduction and regional inequality, as well as a significant impact on growth” with the impact
on poverty substantially larger in the Western region than elsewhere in the country – and the
consequent importance of the agenda of the reform of financing of education to ensure more
equal access to opportunities.
Table A2.3:
Poverty Impact of Alternative Forms of Rural Public Investment
R&D
Irrigation
Roads
Education
Electricity
Telephone
Poverty Loans
Coastal
1.99
0.55
0.83
2.73
0.76
0.60
0.88
Central
4.40
0.77
3.61
5.38
1.65
1.90
0.75
(No. taken out of poverty per 10,000 yuan expenditure)
Source: Fan (2001)
42
Western
33.12
4.06
10.73
28.66
6.17
8.51
1.49
Average
6.79
1.33
3.22
8.80
2.27
2.21
1.13
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Table A2.4:
GDP per Capita at Provincial Level
43
Trends in Poverty and Growth in Asia
Oxford Policy Management
Table A2.5:
Educational Enrolment and Literacy at Provincial Level
44
Trends in Poverty and Growth in Asia
Oxford Policy Management
Table A2.6:
Population and Demographic Change at Provincial Level
45
Trends in Poverty and Growth in Asia
Oxford Policy Management
Table A2.7:
Fiscal Revenue and Expenditure at Provincial Level
46
Trends in Poverty and Growth in Asia
Oxford Policy Management
Table A2.8:
Performance Against Millennium Development Goals
£&¤'¤)¥
£.¨2©Fª2«4¬ ­ª&®^¯?¯&°2®q©F¯>±?¯A²!³2´2¯'©`®"µ?ª'¶«I·'¸)¶¹¯)©
£&¤'¤+¦
§ ¥'¥)¥
£&¤'¤)¤
2015 target = halve 1990 $1 a day poverty and malnutrition rates
Population below $1 a day (%)
Poverty gap at $1 a day (%)
Percentage share of income or consumption held by poorest 20%
Prevalence of child malnutrition (% of children under 5)
Population below minimum level of dietary energy consumption (%)
ÄłÆ7Ç'È É7Ê>ÉhË'Ì'È ÊÉ)Í"ÎbÏ)ÐÑ'Í^ÈUÒhÏ'ÍDÓ:ÉÔaËÆbÏ&ÕqÈ Ö4Ì
ºMº
Mº º
Mº º
»Àº ½
»bÃ'º Â
¿Àº ½
¼&Ã'º Â
¿7½4ºUÀ
Net primary enrollment ratio (% of relevant age group)
Percentage of cohort reaching grade 5 (%)
Youth literacy rate (% ages 15-24)
ØgÙ)Í"Ö)Ò.Ö!Õ^É?Ú>É'Ì2Ô'É'ÍzÉÛ)ËÏ'Ð_È ÕFÓ
'¼ »&ºM»
¿7½4ºU×
ºMº
Á»&ºU×
Ratio of girls to boys in primary and secondary education (%)
Ratio of young literate females to males (% ages 15-24)
Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
ÜnÝ É2Ô4ËÆÉ?ÆdÇ)ÈUÐ ÔoÒhÖ)ÍDÕ9Ï>Ð_È Õ"Ó
ºMº
Mº º
Mº º
»Áº ¿
ºMº
»b¼'º ¼
½4º ½
¾2º ¿
¿)º Â
¿)º Â
ºMº
ºMº
ºMº
»bÂ'º Â
ºMº
2015 target = net enrollment to 100
¿Àº ¿
¿×º ¼
¿!Ã'ºU¾
¿×ºUÁ
¿ÀºU×
¿Àº Ã
2005 target = education ratio to 100
2¼ ÀºY×
¿!Ã'ºQ»
ºMº
ºMº
&¼ ¼'º Ã
¿ÀºM»
ºMº
þÂ'º Â
ºMº
ºMº
¿Àº ¼
Mº º
¿ÀºY×
ºMº
ºMº
2015 target = reduce 1990 under 5 mortality by two-thirds
½>Àº Â
×d¼'º Â
¿!¼'º Â
Under 5 mortality rate (per 1,000)
Infant mortality rate (per 1,000 live births)
Immunization, measles (% of children under 12 months)
Þ.ß ÒoÑ'Í"Ö&Ê>É.Ò.Ï!ÕFÉ)Í9Ì2Ï'Ð>Ç2É2Ï>Ð ÕcÇ
½>׺ Â
×dÃ'ºYÁ
¿×º Â
½4»&º Â
×&׺ Â
¿!Â'º Â
׿)ºU¾
×&Áº Â
ºMº
2015 target = reduce 1990 maternal mortality by three-fourths
Maternal mortality ratio (modeled estimate, per 100,000 live births)
Births attended by skilled health staff (% of total)
àhá4Ö'ÒIâ2Ï7Õã ßqä‚å Å ßæ|çè Ò?Ï'ÐYÏ'Í^ÈYÏ:Ï)Ì!ÔoÖ&Õ<Ç2É'ÍzÔaÈYÎbÉ2ÏÎÉ2Î
ºMº
Mº º
Ã&Â'º Â
¼¾2º Â
ºMº
Mº º
ºMº
ºMº
2015 target = halt, and begin to reverse, AIDS, etc.
ºMº
¼d½4º Ã
ºMº
ºMº
ºMº
Prevalence of HIV, female (% ages 15-24)
Contraceptive prevalence rate (% of women ages 15-49)
Number of children orphaned by HIV/AIDS
Incidence of tuberculosis (per 100,000 people)
Tuberculosis cases detected under DOTS (%)
êoë ÌÎ&Ë)Í`É:É)Ì&Ê)È_Í"Ö)Ì'Ò.É>Ì!Õ9Ï>Ð!Î7ËÎkÕ^Ï'ÈQÌ2Ï'â>È_ÐUÈ Õ`Ó
»d¾2º Ã
ºMº
»&º ¼
ÁºM»
À»&º Â
Á¿)º Â
ºMº
Forest area (% of total land area)
Nationally protected areas (% of total land area)
GDP per unit of energy use (PPP $ per kg oil equivalent)
CO2 emissions (metric tons per capita)
Access to an improved water source (% of population)
Access to improved sanitation (% of population)
Access to secure tenure (% of population)
ì æ É!Ê2É'Ð Ö)Ñ:Ï:íÐ Ö'â2Ï)Ð>Ù2Ï)ÍDÕ<Ì!É)Í"Î7Ç'ÈQÑî"Ö4Í æ É&ÊÉ>Ð Ö4Ñ>Ò?É'Ì&Õ
ºMº
¾2º ¿
Â'º ½
Youth unemployment rate (% of total labor force ages 15-24)
Fixed line and mobile telephones (per 1,000 people)
Personal computers (per 1,000 people)
47
ºMº
¿!Â'º ½
ºMº
Mº º
Mº º
'Â º Â
¼2׺ Â
½>éM¾Â&Â>º Â
»bÂ2׺ Â
×&Áº Â
2015 target = various (see notes)
ºMº
Ã'º ½
׺ Â
Áº Ã
ºMº
ºMº
ºº
ºMº
Ã'º ½
½4ºUÁ
Áº_¾
ºMº
ºMº
ºMº
2015 target = various (see notes)
Á º ¿
×!¾2º ¿
ÁºY×
× ºM»
»ÁdÂ'º Â
»ÁºUÁ
ºMº
ºMº
ºMº
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»ÀºU¾
ºMº
ºMº
ºMº
À!¾2º Â
×d¼'º Â
ºMº
׺Q»
»À&Àº Ã
»d¾2º ¿
Trends in Poverty and Growth in Asia
Oxford Policy Management
í‚É'Ì2É'ÍFÏ>ÐÈQÌ2Ô4ÈYÆbÏ&Õ9Ö4Í"Î
»&ºM»ïdð ñ ñ ð ò&ó »&ºYÁ?ïð ñ ñ ð ò!ó
×dÃ&¼'ºQ»
Ã2Á&ÁºUÀ
Gross national income ($)
ï7ð ñ ñ ð ò!ó
ïdð ñ ñ ð ò2ó
×&ÁdÂ'º Â
¾7ÁdÂ'º Â
GNI per capita ($)
ÀdÃ'º ¿
¼&Â'º ¼
Adult literacy rate (% of people ages 15 and over)
ÁºQ»
»&º ¿
Total fertility rate (births per woman)
Ã&¼'º ¿
Ã7¿)º ½
Life expectancy at birth (years)
Â'º Ã
Â'º_¾
Aid (% of GNI)
»d¾2º Ã
»ÀºUÁ
External debt (% of GNI)
×½4ºYÀ
½2Â'º ¼
Investment (% of GDP)
×»&º ¿
½'¾2ºUÀ
Trade (% of GDP)
ç Ö)Ë)Í"ÆÉ4÷+ø.ùú9û_ühýþ>ÿdþ&ûMùIþ
4ü`ù2úü7þaúQû Population
»&ºU×:ïdð ñ ñ ð ò&ó &» ºY×?ïð ñ ñ ð ò!ó
¿Àd¼'ºM» »&Mº »õô"öDð ñ ñ ð ò2ó
ï7ð ñ ñ ð ò2ó
Àd¼&Â'º Â
d¼ ½2Â'º Â
¼2׺ ½
d¼ ½4ºM»
ºQº
&» º ¿
ºQº
ÀdÂ'Uº ×
Â'ºUÁ
Â'Uº Á
»d¾2º ¼
»k½4Mº »
×&ÀºUÁ
×&ÀUº ×
½4»&ºUÁ
½!¿)ºM»
Table A2.8 summarises at the national level performance against the MDGs. This suggests
that:
•
The extreme poverty reduction MDG is likely already to have been achieved.
•
There is some evidence of declines in primary enrolment from baseline levels that
were already near to 100% net enrolment.
•
There has been significant progress towards gender equality in education but some
level of differential remains.
•
Child and infant mortality was already in 1990 relatively low by the standards of
developing countries. Progress in achieving further reductions has been steady but
slower than the rate needed to attain the international target rate of reduction.
As noted above, however, the national aggregate picture conceals a wide level of disparity
within China – with many poor provinces which are substantially larger in population than
practically all African and many Asian countries, and with sub-provincial differentials in
addition to provincial inequalities. For example, infant and maternal mortality rates and the
incidence of malnutrition in very poor counties are up to 100% higher than the national
average.
A2.2 Prospects for Growth and Poverty Reduction
Economic Factors
As indicated above, the evidence suggests that while the response of poverty to economic
growth has been very strong in China, this response has weakened over time as income
inequality has increased. This has both a regional dimension (with inland and Western
provinces lagging) and a related sectoral dimension, as agriculture on which the bulk of the
poor are directly or indirectly dependent has increasingly fallen behind growth in the
industrial and service sectors. There is evidence that regional differentials in education
48
Trends in Poverty and Growth in Asia
Oxford Policy Management
(which is empirically strongly related to progress in poverty reduction in China) may be
increasing which would exacerbate these trends.
In addition, China has been the most rapidly growing economy in the world for two decades
while sustaining levels of saving and investment that are extraordinarily high by international
standards. Over the last decade growth rates have fallen to levels that while still extremely
high by international standards are lower than those achieved at the peak of growth. China
has moved beyond a phase where liberalisation and investment can generate growth to a
“ more difficult structural and institution-building phase” (World Bank Country Director).
Growth prospects are to a large degree now dependent on export performance as the leading
sectors of the Chinese economy have become strongly integrated into the world economy.
Strengthening market access to the USA and Japan, and the growth prospects in these
economies that directly account for 40% of exports (and indirectly a higher proportion taking
account of exports from Hong Kong-China), will be of central importance. Sustaining
China’ s success in manufacturing exports will require continued investment in human capital
and infrastructure, and rising labour costs in the booming coastal areas will require a move
away from relatively unskilled labour intensive patterns of production that have been
relatively pro-poor.
While much of Chinese economic growth has been based around the dynamism of township
and village enterprises, and latterly direct foreign investment, constitutional recognition of
the position of the private sector occurred only in 1999 and much remains to be done to
improve the environment for the private sector. An active programme is now under way to
simplify private business registration and access to external trade (ADB, 2001). At the same
time, the process of State Owned Enterprise reform has begun but remains a major challenge
– the process is estimated as likely to make around 5 million workers a year redundant.
China’ s very high savings level and process of financial development have meant that banks
hold very high levels of personal savings. A serious banking crisis along the lines that
characterised economic crises in South East Asia would have major economic and political
consequences. The process of financial sector reform will be of considerable importance.
The World Bank’ s CAS (shortly to be released) therefore stresses the importance of
improving the business environment through enhancing macroeconomic management at
national and sub-national levels, assisting further integration into the global economy,
reforming the financial sector, promoting private sector development and enterprise reform,
and strengthening governance in the public sector.
Social Factors
As discussed above, the extent to which health and education access is improved in
disadvantaged areas will be one of the major determinants of how income poverty will
respond to economic growth, as well as directly addressing the large inequalities in education
attainment and health indicators. China will face the problems of developing financing and
delivery mechanisms to meet the steadily increasing demand for improved health facilities
and higher levels of education, while the fiscal base for this expenditure will remain very
different between areas. HIV-AIDS remains a small but rapidly growing problem – UNAIDS
estimates about 1 million Chinese are HIV-infected – which will pose major challenges for
public policy, though this appears unlikely to have a significant impact on growth and income
49
Trends in Poverty and Growth in Asia
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poverty in the short- to medium-term. At the national level, there is a need for major pension,
and social insurance reforms (likely to follow models being piloted in Liaoning province).
Political/Administrative Factors
The Chinese political regime has proved adept at adapting to far-reaching economic and
social changes and rapidly increasing sub-national and social inequalities, through a
combination of economic reform and liberalisation and political repression. The strong drive
to strengthen China’ s regional and international position and reduce poverty has led to highly
pragmatic economic policies. The way in which the regime responds in the future to demands
for democratisation or increased sub-national tensions (which may crystallise in part around
sub-national fiscal policy), and whether economic and social reforms to sustain economic
performance can continue to be carried out within the framework of the Communist one party
state, are issues of central importance for China’ s political stability and economic
performance.
Environmental Factors
China faces formidable environmental problems relating both to the fragility of the
agricultural resource base on which the rural poor are dependent, and the pollution impact
(particularly on air and water quality) of extremely rapid industrial growth in the booming
areas. These issues are discussed in detail in the UNDP 2002 China Human Development
Report.
Interaction with Other Asian Developing Economies
China as an exporter is not dependent to any significant extent on other low-income Asian
developing economies – rather it is Japan and other more developed East and South-East
Asian countries that have been important both as markets and as sources of direct foreign
investment. China is likely to face increased competition in labour-intensive manufacturing if
South Asian economies are successful in expanding exports, though China is already moving
into higher technology exports. It is China’ s potential as a market that is likely to be the main
route of economic interaction with other Asian developing economies.
A2.3 Growth and Poverty Reduction Scenarios
The baseline growth projection is somewhat lower than current growth rates (5% per capita
per annum) reflecting a view that as China’ s integration into the world economy continues
growth rates will tend towards more international levels – the scope for rapid catch up
through reforms, mobilising unskilled labour reserves, and high rates of physical investment
is declining. In addition, the baseline assumes that the poverty impact of growth will continue
to weaken as inequality increases.
The high growth scenario assumes that with a return of economic growth in Japan and
sustained regional recovery, as well as successful implementation of key reforms such as in
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Trends in Poverty and Growth in Asia
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the banking system and State Owned Enterprises sector it will be possible to maintain recent
average growth rates to 2015.
Increasing the poverty impact of growth will require a successful reorientation of anti-poverty
policies towards more effectively targeted support for rural development, and sustained
investment in infrastructure and human capital in poorer provinces and counties. It is also
likely to be associated with high rates of internal migration out of lagging areas. In both cases
it is assumed that increasing regional and social inequalities and pressures for political
change (especially democratisation that has followed sustained economic growth elsewhere
in East and South East Asia) can be accommodated without economic disruption.
Table A2.9:
Scenarios of Poverty Prediction for Rural China
Prediction
scenarios
I.
Underlying assumptions
•
High income
Low inequality
•
II.
•
High income
High inequality
•
III.
•
Low income
Low inequality
•
IV.
•
Low income
High inequality
•
Relatively high income growth. Per capita mean income grows at
3.024%, assuming that GDP doubles every ten years according the
economic development plan for 2000-2010.
Relatively low inequality growth. Elasticity of the Gini coefficient with
respect to income growth is 0.417, following the trend in 1978-94.
Relatively high income growth. Per capita mean income grows at
3.024%.
Relatively high inequality growth. Elasticity of the Gini coefficient with
respect to income growth is 0.609, or 50% higher than the trend in
1978-94.
Low income growth. Per capita mean income grows at 1.512%, 50%
less than the trend in 1985-98.
Relatively low inequality growth. Elasticity of the Gini coefficient with
respect to income growth is 0.417, following the trend in 1978-94.
Low income growth. Per capita mean income grows at 1.512%, 50%
less than the trend in 1985-98.
Relatively high inequality growth. Elasticity of the Gini coefficient with
respect to income growth is 0.609, or 50% higher than the trend in
1978-94.
Notes: (1) All the scenarios assume that rural population rises by 0.5% each year in the forecasting period. This followed the
trend of 1980-98. The elasticities of poverty incidence with respect to income (-2.68) and the Gini coefficient (2.13) remain
constant over time for all the scenarios. They are taken from Table 5.
Authors’ calculations from the rural household survey data in 1995 and 1998.
Source: Yao, Zhang and Hanmer (2002).
Yao, Zhang and Hanmer (2002) carry out a similar scenario analysis for rural China that is
based on an estimation of the relationship between poverty incidence and mean income and
the Gini coefficient. They use the scenarios in Table A2.9 which involve a high income
growth of per capita mean income of just over 3% and a low rate that is half that (both
relatively pessimistic compared to the assumptions used here). The low inequality estimate
has the elasticity of the GC with respect to income growth of 0.417, and a high inequality
response of 0.609. Their calculations show clearly the importance of trends in income
inequality in determining the future poverty impact of economic growth.
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Table A2.10: Simulation Outcomes of Poverty Reduction 1990 to 2015
Scenarios
High income growth
Low income growth
Low
inequality
growth
Scenario I
1. Poverty reduction by 69%.
2. Poverty incidence declines from
24.7% to 7.7%.
3. Poor population declines from 223
million to 79 million.
4. GC rises from 0.38 to 0.57.
Scenario II
1. Poverty reduction by 61%.
2. Poverty incidence declines from
24.7% to 9.6%.
3. Poor population declines from 223
million to 99 million.
4. GC rises from 0.38 to 0.62.
Scenario III
1. Poverty reduction by 50%
2. Poverty incidence declines from
24.7% to 12.3%.
3. Poor population declines from 223
million to 128 million.
4. GC rises 0.38 to 0.51.
Scenario IV
1. Poverty reduction by 43%
2. Poverty incidence declines from
24.7% to 13.9%.
3. Poor population declines from 223
million to 142 million.
4. GC rises from 0.38 to 0.54.
High
inequality
growth
Source: Yao, Zhang and Hanmer (2002)
52
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References
Anderson, K., J. Huang, and E. Ianchovichina, (2002?), Impact of China’ s WTO Accession
on Rural-Urban Income Inequality and Poverty,
Chen, S., and Y. Wang (2001), China’ s Growth and Poverty Reduction: Trends Between
1990 and 1999, Policy Research Working Paper 2651, Development Research Group Poverty
and World Bank Institute Economic Policy and Poverty Reduction Division, July.
Fan, S., (2001), Public Investment, Growth and Poverty Reduction in Rural China and India,
International Food Policy Research Institute, Washington DC.
Lu, F., (2001), Poverty Reduction through Growth: China’ s Experiences, Presentation at
Regional Conference on National Poverty Reduction Strategies, Hanoi, 4-6th December 2001.
Park, A., (2002), Growth and Poverty Reduction in China, University of Michigan, June.
People’ s Daily (2001), White Paper on Rural China’ s Poverty Reduction, October 15th.
Ravallion, M., and S. Chen (2001), Measuring Pro-Poor Growth, draft, World Bank, August.
Rozelle, S., L. Zhang and J. Huang, Growth or Policy? Which is Winning China’ s War on
Poverty?, forthcoming, Food Policy.
Srinivasan, T.N., (2002), China and India: Growth and Poverty, 1980-2000, draft, Yale
University.
UNDP (2002), China Human Development Report.
Yao, S., Z. Zhang, and L. Hanmer (2002), The Implications of Growing Inequality on
Poverty Reduction in China, University of Middlesex.
Yao, S., and Z. Zhang (2002), On Regional Inequality and Diverging Clubs: A Case Study of
Contemporary China, University of Middlesex.
53
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Annex 3: India
A3.1 Growth and Poverty Reduction Performance
Economic Growth
Following a long period over several decades during which average GDP growth fluctuated
around 3.5% (which became known as the “ Hindu rate of growth” – Acharya, 2002), India
suffered a deep fiscal and economic crisis in 1991. This prompted a series of economic
reforms, especially involving trade and foreign exchange liberalisation measures, the
abolition of industrial licensing along with some financial sector reform. Subsequently
growth rates increased with per capita growth in the range 4-6% per annum from 1994 to
1999. In 2000 and 2001, however, growth rates fell to around 2% per capita. This slow down
was associated with the general Asian economic slowdown, increased domestic political
instability, and worsening fiscal problems – especially as a result of large public sector pay
increases.
Figure A3.1: India: Growth Performance 1980-2001
India - Grow th Performance
10
8
6
4
2
0
1980
1981 1982 1983
1984
1985 1986
1987 1988
1989 1990
1991 1992
1993 1994
1995 1996
1997 1998 1999 2000 2001
-2
-4
GDP Growt h per capit a
Growth has been associated with a declining share of GDP for agriculture, a stable share for
industry, and a rising share for services (Table A3.1). Acharya (2002) notes that the
acceleration of growth in the 1990s compared to the previous decade is entirely attributable to
the performance of the services sector. While aggregate GDP grew at 6.7% per year from
1993/4 to 1999/2000, agriculture grew at only 3.2% (Datt and Ravallion, 2002). Employment
shares (though data is incomplete) appear not to have changed significantly however and
there has been evidence of a slowdown in the rate of employment generation and an increase
in unemployment, with agriculture in particular increasingly unable to absorb labour (Cassen,
2002b). Formal sector employment declined between 1994 and 2000 (Dev, 2002).
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Savings and investment shares have remained relatively stable over the last 20 years, and
during the 1990s foreign direct investment grew significantly, though remaining considerably
less than 1% of GDP. The share of exports in GDP doubled between 1982 and 1986.
Merchandise exports grew rapidly especially in the immediate post-reform period with a shift
from primary products (food, fuel) to manufactured goods. However the greatest export
dynamism was in the area of services which increased from 19.3% to 28.5% of total exports
between the first and second half of the 1990s. Much of this was associated with the
development of the computer software industry and the provision of business outsourcing
services, heavily concentrated in a few major cities (for example, Bangalore, Hyderabad and
Mumbai).
Table A3.1:
Indicators of Structural Economic Change
India
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
19821986
34.4
26.1
39.5
19871991
31.6
26.9
41.5
19921996
30.0
27.0
43.0
19972001
26.3
26.7
47.0
..
..
..
68.7
13.5
..
66.8
13.0
..
..
..
..
6.0
0.0
19.6
20.0
0.0
7.1
0.1
21.4
22.0
0.0
10.3
0.4
21.0
22.7
0.4
12.4
0.6
20.7
22.0
0.7
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
Table A3.2:
Structure of Merchandise Exports and Growth of Total Exports
India
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
1982-6
3.2
24.7
11.2
54.7
6.0
Export growth (% per annum)
4.0
1987-91 1992-6
2.6
1.7
17.0
17.1
2.9
2.0
70.5
73.9
5.3
3.6
10.0
13.9
1997-2001
1.7
16.5
0.6
76.5
2.6
6.6
In 2001 over 20% of India’ s exports went to the USA (the largest single destination), with the
UK, Japan, Hong Kong and Germany (the next largest) each accounting for around 5%. In
total 29% of exports were to Asian countries, 27% to Western Europe, 24% to North/Central
America and 10% to the rest of the world.
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Poverty and Inequality
The World Bank estimates that 42% of the population, or 417 million people, had incomes
below the international poverty line of US$ 1 per day (PPP) in 1999. The rate of poverty
reduction over the 1990s was estimated to be significantly slower than would be required to
achieve the MDG of halving poverty by 2015, despite the acceleration in economic growth
during the decade.
Based on the national poverty line, the incidence of poverty (headcount measure), having
generally risen in the 1960s, reaching a peak of around 64%, started to fall steadily from the
early 1970s – declining from around 58% to less than 40% by 1990.
There has been considerable debate about poverty trends in India in the 1990s, resulting in
particular from changes in methodology in the 1999/2000 National Sample Survey which
forms the basis of poverty estimates compared to earlier years.11 Datt and Ravallion (2002)
conclude that India probably maintained its 1980s rate of poverty reduction in the 1990s
(Figure A3.2) but with considerable diversity in performance between states. In particular,
they conclude that growth in the 1990s was not concentrated in those states where it would
have had the most impact on poverty nationally – particularly Bihar, Madhya Pradesh, Orissa
and Uttar Pradesh. The fastest growth in non-agricultural output per capita from 1993/4 was
achieved in the Southern states of Kerala, Tamil Nadu, and Karnataka. West Bengal,
Rajasthan, Punjab and Andhra Pradesh were the next best performers. The worst of the major
states were Madhya Pradesh, Orissa, Maharashtra and Bihar.12
Figure A3.2: Poverty Incidence in India, 1960-2000
Source: Datt and Ravallion (2002)
Table A3.3 shows the poverty headcount, literacy and child mortality rates for the 14 large
Indian states. The total number of poor people is heavily concentrated in large states with
poverty rates significantly above the All India average. Uttar Pradesh and Bihar together
accounted more than 35% of the Indian poor. Madhya Pradesh, Maharashtra and West
Bengal together accounted for a further 27%. Over the period from 1960 to 2000, the highest
rates of poverty reduction were achieved in Kerala, Andhra Pradesh, Gujarat, West Bengal
and Tamil Nadu. The worst performers among the major states were Bihar, Madhya Pradesh
and Uttar Pradesh (Datt and Ravallion, 2002, Table 2).
11
12
See Datt and Ravallion (2002), Deaton (2001), Cassen (2002).
The worst performer overall was Assam.
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Table A3.3:
Economic and Social Indicators for India’s Major States
Population
Andhra Pradesh
Bihar
Gujarat
Haryana
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Orissa
Punjab
Rajasthan
Tamil Nadu
Uttar Pradesh
West Bengal
All India
(m)
1998
75.1
99.2
48.0
19.7
51.8
32.1
79.2
90.7
35.7
23.4
53.2
61.6
168.6
78.6
975.0
Poverty Share of
Headcount Poverty
(%)
(%)
1993/4
21.9
4.7
55.2
15.6
24.2
3.3
25.2
1.4
32.9
4.8
25.1
2.3
42.5
9.6
36.8
9.5
48.6
4.9
11.5
0.8
27.5
4.2
35.4
6.2
41.6
19.9
36.1
8.1
36.1
100.0
Literacy
Under 5
Rate
Mortality Rate
(%) (per 1000 live births)
1997
1998/9
54.0
85.5
49.0
105.1
68.0
85.1
60.9
76.8
58.0
69.8
93.0
18.8
56.0
137.6
74.0
58.1
51.0
104.4
62.1
72.1
55.0
114.9
70.0
63.3
56.0
122.5
62.0
94.9
62.0
94.9
Source: World Bank (2001)
During the 1990s, reflecting the lagging performance of agriculture, the ratio of the rural to
urban poverty incidence increased significantly. Having fluctuated around 1.1 from the mid1970s to 1990, it increased to over 1.4 by the end of the decade (Figure A3.3).
Figure A3.3: Ratio of Rural to Urban Poverty
Source: Datt and Ravallion (2002)
Income inequality in India appears to have fallen slightly during the 1980s with the Gini
coefficient falling from 31.5 to 29.7. There appears however to have been a rise to around 38
by the end of the decade (WIID). The increase in income inequality is consistent with the
apparent reduction in the response of poverty to growth over the 1990s.
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Table A3.4: Performance Against Millennium Development Goals
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2015 target = halve 1990 $1 a day poverty and malnutrition rates
Population below $1 a day (%)
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Poverty gap at $1 a day (%)
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Percentage share of income or consumption held by poorest 20%
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Prevalence of child malnutrition (% of children under 5)
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Population below minimum level of dietary energy consumption (%)
`iI] d
]^]
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Net primary enrollment ratio (% of relevant age group)
]^]
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Percentage of cohort reaching grade 5 (%)
]^]
i6e] f
ih]aj
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f_]ag
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Youth literacy rate (% ages 15-24)
prq
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2005 target = education ratio to 100
Ratio of girls to boys in primary and secondary education (%)
fIjE] e
fMh]oi
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Ratio of young literate females to males (% ages 15-24)
j>gE] h
j>jE]aj
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Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
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2015 target = reduce 1990 under 5 mortality by two-thirds
c>c6`E] d
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eIjE]oj
Infant mortality rate (per 1,000 live births)
e>d] d
j_] d
jd] d
fMh]o`
Immunization, measles (% of children under 12 months)
i6f] d
j>`E] d
i6d] d
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Under 5 mortality rate (per 1,000)
@Cy2PxRDGTUENCPsF>LNDXIFmEYINIFm LzY
2015 target = reduce 1990 maternal mortality by three-fourths
]^]
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Maternal mortality ratio (modeled estimate, per 100,000 live births)
Births attended by skilled health staff (% of total)
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Number of children orphaned by HIV/AIDS
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Tuberculosis cases detected under DOTS (%)
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Prevalence of HIV, female (% ages 15-24)
Contraceptive prevalence rate (% of women ages 15-49)
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GDP per unit of energy use (PPP $ per kg oil equivalent)
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”b”
CO2 emissions (metric tons per capita)
Forest area (% of total land area)
Nationally protected areas (% of total land area)
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Access to an improved water source (% of population)
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Access to improved sanitation (% of population)
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Access to secure tenure (% of population)
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Fixed line and mobile telephones (per 1,000 people)
šI” ˜
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Personal computers (per 1,000 people)
•” £
™ ”£
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— ”š
Youth unemployment rate (% of total labor force ages 15-24)
58
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Oxford Policy Management
§¬’’G€ŒŽIŽ ­2€}G“
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—>— •” •
— š6•” •
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š £ ”£
š6–” —
šM¤E”a¢
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”^”
£ ”™
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•” £
•” £
External debt (% of GNI)
¢–”o¤
¢>¤E” •
¢>¢E”o¢
¢ ™ ”˜
Investment (% of GDP)
¢šI”o¢
¢–”o¤
¢ — ”£
¢ — ”•
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Population
Adult literacy rate (% of people ages 15 and over)
Total fertility rate (births per woman)
Life expectancy at birth (years)
Aid (% of GNI)
Trade (% of GDP)
Í }’´
In some cases the data are for earlier or later years than those stated.
Table A3.4 summarises at the national level performance against the MDGs. This suggests
that over the 1990s there was significant progress in reducing child malnutrition, youth
literacy and infant and child mortality and in reducing the gender gap in education.
Contraceptive prevalence increased, and total fertility fell from 3.8 to 3.1 births over the
decade while life expectancy increased from 59.1 to 62.8. However, as shown in Table A3.3
the variation between states is large, quite apart from intra-state variation. For example
among the 14 major states literacy rates range from 93% in Kerala (which is a significant
outlier) and around 70% in Maharashtra, Tamil Nadu and Gujarat, to 49% in Bihar and 51%
in Orissa. Child mortality in Kerala (18.8 per 1000) is comparable to developed countries
while in Madhya Pradesh the rate is 137.6, which is over double that in other good
performers like Tamil Nadu and Maharashtra.
There is a significant body of empirical evidence on the relationship between poverty and
growth in India. Ravallion and Datt (1999) examine how the sectoral composition of
economic growth and initial conditions influence the way in which economic growth
impacted on consumption poverty over the period 1960-94. They concluded that the response
of poverty to farm yields and development spending did not vary much between states, but
that there were significant differences in the response to non-farm output growth. The nonfarm growth process was most pro-poor in those states with initially higher farm productivity,
higher rural living standards relative to urban areas, and higher literacy.
Ravallion (2000) concludes on the basis of this and related research that:
•
The composition of growth (sectorally and geographically) affects its impact on
poverty, with agriculture being particularly important.
•
Higher agricultural productivity is the key to rural poverty reduction but that this
process is complex and not necessarily rapid.
•
Making non-farm (rural and urban) growth more pro-poor requires both rural
development and human resource development.
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•
Higher public spending on basic health and education will bring large gains to the
poor both directly and in terms of their ability to participate in economic growth.
Empirical evidence suggests that, associated with increasing inequality, the poverty impact of
growth may have weakened over the 1990s. Estimates of the poverty elasticity of growth for
the period before the 1990s are in the range –0.75 to 0.92, but the implied rate for the 1990s
is lower than this – perhaps as low as -0.45 depending on the interpretation of the poverty
data. While poverty is likely to have continued to fall at a rate similar to that of the previous
decade, this took place over a period of significantly higher average growth.
A3.2 Prospects for Growth and Poverty Reduction
Acharya (2002) discussed India’ s growth prospects over the next five years, and notes several
trends affecting growth performance, culminating in the slowdown in 2000 and 2001. He
notes in particular:
•
Both savings and investment peaked in the mid-1990s as proportions of GDP and
have subsequently fallen, with public saving declining from 2% of GDP to –1.7% in
2000/1, reflecting a worsening underlying fiscal position.
•
The financial sector has come under growing stress with the performance of the
public sector-dominated commercial banking system being particularly weak. While
the need for reform is increasingly urgent there has been little progress in developing
a reform programme.
•
Both merchandise and service exports stagnated after 2000, and while the phased
elimination of Quantitative Restrictions on trade continued, import weighted tariffs
have increased, while the rupee has been allowed to appreciate in real terms. FDI
grew rapidly from 1991 to 1997 but has not increased subsequently.
•
The performance of the power, roads, and rail sectors has deteriorated because of
mounting fiscal pressure and continued under-pricing and cross-subsidisation,
although reform in the telecommunications sector has been successful.
•
Agriculture has continued to lag reflecting a number of factors including falling
public investment, deterioration in the operations and maintenance of irrigation
systems and rural roads, pricing policies that have slowed the diversification away
from cereals and generated stockpiles, soil quality declines from over use of fertiliser
and continuing fragmentation of landholdings as population pressure in rural areas
increases.
•
Restrictive labour laws and reservation of many labour-intensive products for smallscale industry, and the poor performance of the education system in producing
marketable skills.
•
Declining quality of public administration.
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On this basis and without evidence of a strong political commitment to deeper reforms, he
concludes that growth is not likely to recover to the immediate post-reform rates of 6.7% per
annum (1992-7), being most likely to remain around 5% provided that an economic crisis is
not triggered by financial sector collapse, worsening government finances or war.
McKinsey (2002) conclude on the basis of sectoral studies that three major factors inhibit a
rapid increase in India’ s economic growth which they consider could increase to match
China’ s rate of around 10% per annum. These are the multiplicity of regulations governing
product markets (including reservation of 83013 products for small-scale producers and
restrictions on FDI in certain sectors such as retail), distortions in land markets (resulting
from lack of clarity of ownership, inefficient property tax systems, and rent control and
zoning that prevents changes in use), and widespread government ownership of businesses
(controlling 43% of the capital stock). They estimate that these factors constrain growth by
4% a year while minor factors (inflexible labour laws and poor transport infrastructure)
contribute a further 0.5%.
Cassen (2002a) notes that while fertility is continuing to decline (halving in 30 years)
population growth will continue, perhaps increasing by 40% over the next 25 years based on
a projection of average total fertility falling to 2.1 births per woman by 2016-21. The trend
towards urbanisation will continue but the population will remain predominantly rural – the
urban share projected as increasing from 28% in 2001 to 36% in 2026. Demand for education
is likely to grow sharply while financing reforms and improved quality will be necessary to
meet this demand. Environmental problems and the spread of HIV will have a negative
impact on health. This study also projects poverty remaining a significant problem – 190
million still below the poverty line in 2026, though fertility reduction will be one factor
contributing to reduced poverty.
A3.3 Growth and Poverty Reduction Scenarios
The baseline growth projection is a continuation of the average rate in the period 1997-2001.
This rate is higher than the rates achieved in 2000 and 2001, but is lower than the immediate
post-reform period and is approximately in line with Acharya’ s projections. The high growth
scenario is based on a progressive increase towards the rates of growth being achieved by
China – this is significantly lower than the McKinsey rapid growth scenario. The agenda of
reforms to boost growth is clear, though the relative importance of different measures in
terms of their likely impact may be disputed. The issue is largely the political feasibility of
the reform agenda being carried through and implemented. India clearly possesses the
capacity for a significant increase in its rate of growth, though the poor performance on
education and health indicators will act as a constraint and limit the capacity of the poor to
share in the benefits of growth.
The poverty elasticity used in the baseline reflects historical performance for the period for
before the 1990s. The baseline therefore implies an improvement in the relationship between
growth and poverty. The high poverty impact projection would be significantly better than
what has been achieved in the past and would require changes such as a significant shift in
the sectoral sources of growth towards agriculture, and the geographical distribution of
growth towards the North and East, with the tendency to increasing inequality being slowed.
13
Reduced to 280 in 2001 as a result of WTO commitments.
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References
Acharya, S., (2002), India’ s Medium-Term Growth Prospects, Economic and Political
Weekly, July 13.
Cassen, R.H., (2002a), Twenty-first Century India: Population, Environment and Human
Development – Overview, draft.
Cassen, R.H., (2002b), Well-Being in the 1990s: Towards a Balance Sheet.
Datt, G., (1998), Poverty in India and Indian States: An Update, FCND Discussion Paper No.
47, International Food Policy Research Institute, Washington DC.
Datt, G., and M. Ravallion (2002), Is India’ s Economic Growth Leaving the Poor Behind?,
draft May, World Bank.
Deaton, A., (2001), Computing Prices and Poverty Rates in India, 1999-2000, draft,
Princeton University.
Dev, S.M., (2002), Pro-Poor Growth in India: What Do We Know About Employment
Effects of Growth 1980-2000?, Working Paper 161, Overseas Development Institute.
Ferro, M., D. Rosenblatt, and N. Stern, Policies for Pro-Poor Growth in India, draft, May,
World Bank.
McCulloch, N., and B. Baulch (1999), Tracking Pro-Poor Growth, id21 Insights 31,
September.
McKinsey Global Institute (2002), India: The Growth Imperative.
Ravallion, M., (2000), What is Needed for a More Pro-Poor Growth Process in India?
Development Research Group, World Bank.
Ravallion, M., and G. Datt (1999), When is Growth Pro-Poor? Evidence from the Diverse
Experience of India’ s States, World Bank.
Srinivasan, T.N., (2002), China and India: Growth and Poverty, 1980-2000, draft, Yale
University.
World Bank (2001), India: Country Assistance Strategy, June.
62
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Annex 4: Indonesia
A4.1 Growth and Poverty Reduction Performance
Economic Growth
Indonesia managed sustained and rapid growth associated with rapid reductions in poverty
over several decades until the Asian financial crisis hit the Indonesian economy in 1998. This
precipitated a political crisis after a long period of political stability under the Suharto
regime. Per capita GDP growth exceeded 5% in every year from 1989 to 1996 (and averaged
4.8% over the previous 30 years), before dipping in 1997 leading into a catastrophic collapse
of almost 15% in 1998. The economic collapse had a number of causes, but reflected a loss of
international confidence in the profitability of investments in some East Asian economies,
precipitating a banking crisis, capital flight, and macroeconomic instability (McKibbin and
Martin, 1999). Recovery has been slow compared to past growth experience, with per capita
GDP growth projected not to exceed 2-3% per annum from 2000 to 2003.
Figure A4.1: Indonesia: Growth Performance 1980-2001
Indonesia - Grow th Perform ance
10
5
0
1980
1981 1982 1983 1984
1985 1986
1987 1988 1989 1990
1991 1992 1993 1994
1995 1996
1997 1998 1999 2000 2001
-5
-10
-15
-20
GDP Growt h per capit a
Between 1982-6 and 1992-6, agriculture’ s share of GDP fell from 23.1% to 17.3%, with the
shares of industry and services increasing. The export share of GDP rose modestly from
24.0% to 26.7%. Net FDI increased from 0.3% to 1.7% of GDP. Savings and investment
shares also increased. Over the crisis and immediate post-crisis period (1997-2001),
agriculture’ s share of GDP was on average constant while industry increased and services fell
significantly. Savings and investment fell as a proportion of GDP and net FDI was negative.
The export share of GDP rose sharply to 40% although average export growth was only 3.1%
per annum, reflecting the sharp decline of GDP in US dollar terms and the effects of
devaluation.
63
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Table A4.1:
Indicators of Structural Economic Change
19821986
23.1
36.8
40.2
19871991
20.0
34.5
45.4
19921996
17.3
40.4
42.3
19972001
17.4
45.3
37.3
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
54.8
12.2
32.9
55.4
11.6
31.8
47.9
17.0
35.0
43.1
17.7
39.3
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
24.0
0.3
29.6
23.8
0.3
24.6
0.8
32.7
26.4
0.8
26.7
1.7
31.7
27.5
1.9
40.0
-0.8
25.6
23.1
3.7
Indonesia
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Between 1982-6 and the 1990s, there was a sharp fall in the significance of fuel as a share of
exports (from over 70% to around 25%), and a sharp rise in manufactures from just over 10%
of exports to 50%.
Table A4.2:
Structure of Merchandise Exports and Growth of Total Exports
Indonesia
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
1982-6
6.5
8.4
70.4
10.5
3.8
Export growth (% per annum)
1.3
1987-91 1992-6
7.9
5.2
12.1
11.3
42.2
27.9
32.6
50.9
5.2
4.7
8.9
9.0
1997-2001
4.1
10.9
23.0
49.7
4.7
3.1
Poverty and Inequality
During the period of sustained economic growth, the headcount poverty rate in Indonesia
(national measure) fell from 40.1% in 1976 to 11.3% in 1996, with approximately two-thirds
of the poor in rural areas (Table A4.3).
While the immediate poverty impact of the economic crisis was severe (alternative estimates
are shown in Table A4.3 and Figure A4.2), it appears that poverty subsequently fell again
sharply in response to improving real wages, increasing employment and sharp declines in
food prices – though the interpretation of survey data and existing poverty lines during the
crisis period is difficult because of rapid changes in relative prices during the period and
consequent changes in expenditure patterns. Vulnerability to poverty remains high in the
post-crisis period – 30-60% of the population face a greater than 50% chance of experiencing
severe poverty over a three year period (World Bank, 2001).
64
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Table A4.3:
Trends in Poverty
Figure A4.2: Trends in Poverty Over the Crisis Period
65
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Table A4.4:
Regional Distribution of Poverty
There are significant differences in the regional distribution of poverty (Table A4.4). The
poor are predominantly located on Java (over 60% of the total), but the areas with the highest
proportions of poor people are widely scattered.
While health and education indicators are relatively good compared to most other Asian
developing economies, education and gender equality did not improve over the 1990s,
although child and infant mortality rates did fall significantly (Table A4.5).
66
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Table A4.5: Performance Against Millennium Development Goals
Î Ï"ÐÒÑ,Ï"ӃԨÕ×ÖÙØ5Ñ5Ú-Ï/ÛÜ
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â>ããä
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â>ããå
æ äää
â>ããã
2015 target = halve 1990 $1 a day poverty and malnutrition rates
Population below $1 a day (%)
ùbù
ù^ù
ú6ûEù ü
ùbù
Poverty gap at $1 a day (%)
ùbù
ù^ù
ú>ù ü
ùbù
Percentage share of income or consumption held by poorest 20%
ùbù
ù^ù
üù ý
ùbù
Prevalence of child malnutrition (% of children under 5)
ùbù
þÿù ý
ù^ù
ùbù
ù^ù
ù ý
ùù
Population below minimum level of dietary energy consumption (%)
æ ìMöëaîMóEîS÷õë óEîèéñèëðCéè9ô$îIê÷Eì2éínëaòõ
üù ý
üEù
Net primary enrollment ratio (% of relevant age group)
Youth literacy rate (% ages 15-24)
þEù
I
üIù ý
Ratio of girls to boys in primary and secondary education (%)
üýù
Percentage of cohort reaching grade 5 (%)
èGòðsò>íî$øîõIêîèî÷Eéë íGô
üù
Ratio of young literate females to males (% ages 15-24)
þù ÿ
Share of women employed in the nonagricultural sector (%)
üIù ÿ
ùaû
üù
îIê÷EìîQìöëaêxðCòèíéoë íGô
üú>ùaþ
üýù
üEù
IþEù ý
Infant mortality rate (per 1,000 live births)
>ýù ý
Eù
Immunization, measles (% of children under 12 months)
å2ðxñèGòóEîCðsé>íîèõIéEöIîIé ízö
üEù
üýù
üù ý
þEù ù^ù
üù
ù^ù
ùbù
üù ù^ù
ùbù
ÿIýù ý
ùbù
ù ý
ÿù ý
IûEù
ù^ù
Iú>ù ÿ
ù^ù
ÿIýù ü
ýù ü
ùbù
2015 target = reduce 1990 maternal mortality by three-fourths
Maternal mortality ratio (modeled estimate, per 100,000 live births)
Births attended by skilled health staff (% of total)
òð"!IéMí$#%'&%( )+*, ðQé éèë éQéõIêSò>íöIîèêë 2îEéî
ùbù
ÿEù ý
ÿýù ý
ùbù
ù^ù
ùbù
ÿEù ý
ù^ù
2015 target = halt, and begin to reverse, AIDS, etc.
ùbù
Prevalence of HIV, female (% ages 15-24)
ù^ù
ýù ý
ÿüù
2ÿù-
Number of children orphaned by HIV/AIDS
ùbù
ù^ù
Incidence of tuberculosis (per 100,000 people)
ùbù
ù^ù
ûIûEù ý
Tuberculosis cases detected under DOTS (%)
ùbù
ù^ù
ú
üù ý
Contraceptive prevalence rate (% of women ages 15-49)
/ çEõM÷è9îQîõ>óëbèGòõðCîõíé>÷ íWéëõIé!ë
ë íGô
Iùoû
Forest area (% of total land area)
ùbù
Nationally protected areas (% of total land area)
þ ù
GDP per unit of energy use (PPP $ per kg oil equivalent)
CO2 emissions (metric tons per capita)
Access to an improved water source (% of population)
éèíõIîè>öëñ4Gòè5)ŠîMóEîaòñðQîõMí
2015 target = various (see notes)
ù^ù
ú2ýù
ÿù ù^ù
ùbù
ùbù
ùbù
ù ý
ú2ýù
ùbù
ÿù ÿ
ùbù
ú>ùaû
ú>ùbú
ù^ù
ù^ù
ù^ù
ù^ù
ù ý
ù ý
ù^ù
ù^ù
ùbù
Youth unemployment rate (% of total labor force ages 15-24)
ÿù Fixed line and mobile telephones (per 1,000 people)
ù ý
Personal computers (per 1,000 people)
ú>ù^ú
67
û.ý>ý>ýù ý
ùbù
ýù ü
ùbù
Access to secure tenure (% of population)
Eù ý
ùbù
Müù ý
2ÿù ý
Access to improved sanitation (% of population)
î>óIîaòñ$é213 ò!Ié
ùbù
2015 target = reduce 1990 under 5 mortality by two-thirds
Under 5 mortality rate (per 1,000)
0 )
ùbù
2005 target = education ratio to 100
ùbù
Proportion of seats held by women in national parliament (%)
2015 target = net enrollment to 100
ùbù
2015 target = various (see notes)
ú6þEù ÿ
úEù ü
Iù ý
ù^ù
ùbù
þ6üù
ÿù
üùbú
üù ü
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Oxford Policy Management
1¬îõîèGéëõIêë ì2éíòè
6 ú78 8 7 9ùaû:
;;;? A
F 7 8 8 7 9:
Gross national income ($)
H B A? A
GNI per capita ($)
C<? H
Adult literacy rate (% of people ages 15 and over)
K? A
Total fertility rate (births per woman)
H ;?-C
Life expectancy at birth (years)
;? H
Aid (% of GNI)
@
>
External debt (% of GNI)
H ?A
KA?-C
Investment (% of GDP)
><?L;
Trade (% of GDP)
PQ@RSTEU@VXWYZ\[
] ^`_a_[LYb@cd_egf@h=e@]iLjEkflYZnmo]kfpkqkm_srut%bgZni
[v@wwv
Population
;=<>@? A
67 8 8 7 9:
;=<>@? G
F 7 8 8 7 9:
;IAAA? A
GK? H
B ?G
H >@?M;
A?C
H K? >
K;? <
JE>@? A
B AC? A
6D7 8 8 7 9:
;;=<?C
F 7 8 8 7 9:
JGA? A
G H ?B
?L?
?L?
;?C
;; H ? H
;;? >
H B ?<
B ;EA? >
67 8 8 7 9:
;;=<? A
F 7 8 8 7 9:
JCA? A
G H ?<
B ?J
HH ? A
;? B
;EAA? >
;N>@? H
CO>@?L;
A4.2 Prospects for Growth and Poverty Reduction
Indonesia’ s economic recovery since the collapse of 1998 has been at a modest rate compared
to earlier growth performance. GDP growth is projected to be only 3.0% in 2002 and 3.6% in
2003 – approximately the same as in 2001. Inflation remains a threat and the burden of debt
is a significant constraint on public finances. Interest on public debt equalled 5.9% of GDP in
2001, approaching a third of government revenues. Continuing political uncertainty through
2001 followed by the spillover effects of September 11th had a negative effect on investment
and confidence in 2001 and the following year. ADB (2002) considers that improved
prospects in external markets, continued economic reforms, and prudent fiscal and monetary
policy will imply a sustained recovery. However “ there seems little prospect that the
economy will again experience the rapid economic growth of the order of 7-10% annually
that it experienced during the decades prior to the financial crisis.
There is also evidence that the poverty impact of growth is falling. ADB (2002) quotes
survey evidence that there was no reduction in poverty during the first 10 months of 2001,
despite the growth achieved and that “ at the 3-4% GDP growth rate currently anticipated,
average income can be expected to rise by only 1-2% per year, i.e. far too little to materially
affect the bulk of the population that is poor or near-poor.” The agriculture sector on which
the bulk of the poor are dependent has performed particularly badly – the strong growth of
agriculture compared to some other South East Asian countries (such as the Philippines) is
one reason why Indonesia’ s growth path has been relatively pro-poor in the pre-crisis period
(Balisacan et al, 2002).
The ADB considers that regaining high growth rates will require “ convincing domestic and
international investors that reforms are effectively curbing corruption and weaknesses in the
legal and judicial system.” As well as macroeconomic and institutional reforms, however,
active pursuit of policies to improve peace and security will be required.
68
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A4.3 Growth and Poverty Reduction Scenarios
The use of the 1999 baseline for the scenarios is somewhat problematic in the case of
Indonesia because of the dramatic changes to the poverty situation taking place during 19989, and the methodological problems of measuring poverty in a period of rapid relative price
change.
The baseline scenario projects per capita growth at a rate (3%) slightly above that which has
prevailed over the post-recovery period. The high growth scenario projects a return to the
growth rates of the pre-crisis period (6%). The prospects for achieving these rates depends
initially on political factors and the ability to sustain macroeconomic stability, control
regional and religious unrest, reduce the burden of debt on the economy and carry through
sustained economic reforms particularly in relation to the financial sector.
The GEPR is based on estimates from the pre-crisis period in Warr (2001). The basis for
making assumptions about the current status of this relationship is fragile however. Much
depends on whether the future growth path will relatively benefit agriculture, as was the case
during earlier growth.
References
Balisacan, A.M., E.M. Pernia, and A. Asra, (2002), Revisiting Growth and Poverty Reduction
in Indonesia: What Do Subnational Data Show?, ERD Working Paper Series No. 25,
Economics and Research Department, Asian Development Bank.
McKibbin, W., and W. Martin (1999), The East Asian Crisis: Investigating Causes and Policy
Responses, Policy Research Paper 2172, August, The World Bank.
Quibria, M.G., (2002), Growth and Poverty: Lessons from the East Asian Miracle Revisited,
ADB Institute Research Paper 33, Asian Development Bank Institute, February.
World Bank (2001a), Country Assistance Strategy – Indonesia, Report No. 21580-IND.
World Bank (2001b), Poverty Reduction in Indonesia: Constructing a New Strategy, Report
No. 23028-IND.
69
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Annex 5: Pakistan
A5.1 Growth and Poverty Reduction Performance
Economic Growth
After a buoyant performance between 1980 and 1992 (only once falling below 2% per
annum), Pakistan’ s average per capita economic growth has been markedly worse over the
last decade (only once exceeding 2% per annum). The 1990s was marked by macroeconomic
instability – Pakistan embarked on nine IMF stabilisation programmes over the period and
failed to complete any of them on schedule – and increasing regional conflict and social
disruption. The World Bank (World Bank, 2002a, Annex II) argues that during the 1990s
“ the effects of the dual constraints of a misguided incentive regime and an inadequate
regulatory framework for infrastructure were exacerbated by an unstable and risky
macroeconomic environment. But these failings had been around for years. What was new
was the way an accelerating, corrosive deterioration in the governance of public institutions
weakened economic management and created an unfavourable investment climate.” During
the period the annual budget deficit averaged 7% of GDP, inflation was in double digits, and
a current account deficit exceeding 5% of GDP. The early 1990s saw simultaneously the
influx of Afghan refugees, droughts and floods, and severe pest attack on the cotton crop
(Khan, 2002). Noman (2002) argues that the burden of defence spending (which by the end
of the 1990s exceeded total public development spending), the severe disruption to transport
links caused by civil conflict in Karachi (the main port) have been the major factors in
explaining Pakistan’ s poor growth performance over the 1990s. In terms of openness to trade
and investment, Pakistan’ s environment is better than that of India.
Figure A5.1: Pakistan: Growth Performance 1980-2001
Pakistan - Grow th Perform ance
8
7
6
5
4
3
2
1
0
1980
1981 1982 1983
1984
1985 1986
1987 1988
1989 1990
1991 1992
1993 1994
1995 1996
1997 1998 1999 2000 2001
-1
-2
GDP Growt h per capit a
Pakistan’ s economy has seen little structural change over the last two decade with the GDP
shares of agriculture, industry, and services approximately constant. The share of
70
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employment has fallen in agriculture and industry and risen in services. The GDP share of
exports rose significantly between 1982-6 and 1992-6, but has fallen over the last five years.
The same pattern applies to savings, investment and foreign direct investment.
Table A5.1:
Indicators of Structural Economic Change
19821986
29.2
22.6
48.2
19871991
26.2
24.6
49.2
19921996
25.5
24.9
49.6
19972001
26.5
23.5
50.0
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
52.5
19.7
27.5
50.0
20.0
29.8
47.9
18.6
33.4
46.3
17.7
36.0
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
11.1
0.2
7.2
16.8
0.3
14.5
0.5
11.1
17.2
0.6
16.1
1.0
12.7
18.0
1.0
15.9
0.8
11.5
14.5
0.9
Pakistan
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Export growth was strong until 1991, but has subsequently stagnated. Manufactures dominate
exports, with the share of agricultural raw materials and food falling from 33% in 1982-6 to
14.1% in 1997-2001. Between 1990 and 2001 the share of exports going to North America
and the Middle East increased significantly, while the share to Asia and Western Europe fell.
Table A5.2:
Structure of Merchandise Exports and Growth of Total Exports
Pakistan
% of merchandise exports:
Agricultural raw materials (%)
Food (%)
Fuel (%)
Manufactures (%)
Ores and metals (%)
1982-6
13.6
19.4
2.2
63.2
0.5
Export growth (% per annum)
9.5
1987-91 1992-6
13.6
5.2
11.8
10.0
1.0
0.9
73.1
83.4
0.3
0.2
11.2
3.4
1997-2001
2.3
11.8
0.9
84.7
0.2
1.2
Poverty and Inequality
Pakistan was notable until the 1990s as a country that had achieved high rates of economic
growth but failed to translate these into social gains as measured by education, health or
income poverty reduction. However, there was a significant degree of progress during the
1980s and early 1990s in reducing income poverty. The Headcount poverty rate fell from
46% in 1984/5 to 28.6% in 1993/4. As growth stagnated during the 1990s, however, poverty
increased, reaching 32.6% by 1998/9.
71
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Table A5.3:
Poverty Headcount Estimates for Pakistan
1984/5
38.2
49.3
46.0
Urban
Rural
Overall
1987/8
30.7
40.2
37.4
1990/1
28.0
36.9
34.0
1993/4
17.2
33.4
28.6
1998/9
24.2
35.9
32.6
Source: World Bank (2002b)
Over the 1990s as a whole, urban poverty declined while rural poverty was relatively
unchanged, after both had fallen sharply between 1984/5 and 1990/1. Poverty was regionally
concentrated in North West Frontier Province and the Federally Administered Tribal Areas.
Over the 1990s rural poverty increased in Sindh and NWFP, while falling in Punjab and
Balochistan. By contrast, urban poverty fell most over this period in Sindh and NWFP.
Table A5.4:
Punjab
Sindh
NWFP
Balochistan
Azad J & K
N. Areas
FATA
National
Incidence of Poverty by Province and Region During 1990s
1990/1
29.4
24.1
37.0
26.7
..
..
..
28.0
Urban
Rural
Overall
1993/4 1998/9 1990/1 1993/4 1998/9 1990/1 1993/4 1998/9
18.4
26.5
38.5
31.9
34.7
35.9
28.2
32.4
13.9
19.0
30.8
31.5
37.1
27.6
23.4
29.2
26.5
31.2
40.6
39.8
46.5
40.0
37.9
44.3
16.5
28.4
20.9
37.5
24.0
22.0
35.2
24.6
..
14.5
..
..
15.7
..
..
15.6
18.4
22.6
..
31.9
37.9
..
28.2
36.5
13.9
..
..
31.5
44.5
..
23.4
44.5
17.2
24.2
36.9
33.4
35.9
34.0
28.6
32.6
Source: World Bank (2002b)
While inequality fell between 1990/1 and 1996/7 it had risen by 1998/9 to levels higher than
at any time since the early 1980s with a particularly marked increase in urban inequality
between 1996/7 and 1998/9. During the 1990s, “ rural Pakistan suffered from lack of growth
in consumption, urban regions experienced consumption growth that was not pro-poor” .
From 1990/1 to 1998/9, the average annual growth rate in consumption of the bottom 20%
and middle 20% of the urban population fell by 0.6% and 0.1% respectively, while for the top
20% it grew by 1.2% per annum (World Bank, 2002b, p.27). Land ownership is highly
unequal which has limited the scope for widely spread rural growth.
Table A5.5:
Inequality – Gini Coefficients
1984-85
1987-88
Urban
31.4
31.6
Rural
26.3
24.0
Overall
28.4
27.0
Source: World Bank (2002b)
1990-91
31.6
26.7
28.7
72
1992-93
31.6
25.2
27.6
1993-94
30.2
24.6
27.6
1996-97
28.4
23.8
26.3
1998-99
35.3
25.1
29.6
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Table A5.6: Performance Against Millennium Development Goals
xzyz{}|p~uy€ƒ‚„o…€†‡=ˆ‰x‡„$Š|‹pŒ
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ŽŽg
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ŽŽŽ
2015 target = halve 1990 $1 a day poverty and malnutrition rates
Population below $1 a day (%)
Poverty gap at $1 a day (%)
Percentage share of income or consumption held by poorest 20%
Prevalence of child malnutrition (% of children under 5)
Population below minimum level of dietary energy consumption (%)
‘´ —¦–-™¡™Ÿ¨¥– ¡™“µO”¶ž“n–
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ªLª
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ªLª
Lª ª
Net primary enrollment ratio (% of relevant age group)
Percentage of cohort reaching grade 5 (%)
²·ª ²
Youth literacy rate (% ages 15-24)
¸¹ “  ˜š™›©™¥•™“%™º@¨”¶
– ˜£
²®ª ³
²°ª ­
®ª ®
¬ª ­
Ratio of girls to boys in primary and secondary education (%)
Ratio of young literate females to males (% ages 15-24)
Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
»¼ ™•@¨—O™2—¦–¶-•" @“¢˜š”¶– ˜£
«¬ª ­
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ªMª
ªMª
Mª ª
Mª ª
Mª ª
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ªLª
Lª ª
Lª ª
Lª ª
Lª ª
2015 target = net enrollment to 100
ªMª
Mª ª
±«ªL¬
ªMª
Mª ª
±®ª-¯
2005 target = education ratio to 100
Mª ª
±«ª-·
ự
ªMª
ªMª
±·ª °
ªMª
ªMª
ªLª
Lª ª
±·ª ­
ªLª
±³ª °
ªLª
ªLª
2015 target = reduce 1990 under 5 mortality by two-thirds
¬«³ª ­
¬¬E­ª ²
±­ª¯
Under 5 mortality rate (per 1,000)
Infant mortality rate (per 1,000 live births)
Immunization, measles (% of children under 12 months)
½E"ž“ ¡™ ”˜n™“š¥”¶¦™”¶ ˜'¦
¬¬E³ª ­
°±ª ®
±«ª-«
¬¬¯ª ­
³±ª ­
±E²@ª ­
¬¬E­ª«
³«ª«
ªLª
2015 target = reduce 1990 maternal mortality by three-fourths
Maternal mortality ratio (modeled estimate, per 100,000 live births)
Births attended by skilled health staff (% of total)
¾ ¿ "À”˜$Á%½'Â%à ´ ½Ä+ÅÆX2”¶ ”“n– ”2”¥•Ÿ ˜s¦™“%•u– µE™”µO™µ
ªLª
²­ª ­
¯­­ª ­
ªMª
ªMª
Mª ª
ªLª
Lª ª
2015 target = halt, and begin to reverse, AIDS, etc.
ªLª
¬N²@ª ­
ªLª
ªLª
ªLª
Prevalence of HIV, female (% ages 15-24)
Contraceptive prevalence rate (% of women ages 15-49)
Number of children orphaned by HIV/AIDS
Incidence of tuberculosis (per 100,000 people)
Tuberculosis cases detected under DOTS (%)
È ’¥µ¨“l™2™¥¡–L“ ¥™¥˜n”¶µ¨µN˜¤”–
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«O²@ª ­
ªLª
Forest area (% of total land area)
Nationally protected areas (% of total land area)
GDP per unit of energy use (PPP $ per kg oil equivalent)
CO2 emissions (metric tons per capita)
Access to an improved water source (% of population)
Access to improved sanitation (% of population)
Access to secure tenure (% of population)
É ÄX™¡™¶- ž›”2Ê3¶ À”¶ ¹ ”“¢˜s¥™“µ¦–
žË @“5Ä+™¡™¶- ž2™¥˜
«ª ®
·ª
±
¬ª«
Youth unemployment rate (% of total labor force ages 15-24)
Fixed line and mobile telephones (per 1,000 people)
Personal computers (per 1,000 people)
73
ªMª
¬·ª ³
ªMª
ªMª
ªMª
­ª ­
ªMª
·Ç°­­ª ­
¬··ª ­
¯ª ­
2015 target = various (see notes)
ªMª
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ªMª
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2015 target = various (see notes)
³ª °
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Trends in Poverty and Growth in Asia
Oxford Policy Management
Ê̙¥™“”¶–
¥•u– —E”˜š “µ
Í ¬EÎ­Ï Ï ³Î Ъ ­Ñ
Í¬Î¯Ï Ï ¯Î Ъ ² Ñ
²¯ª ®Ò Î Ï Ï Î ÐÑ ±³ª-¯2Ò Î Ï Ï Î ÐÑ ®­ª ­
Gross national income ($)
GNI per capita ($)
«°­ª ­
²³­ª ­
«±ª ²
«°ª«
Adult literacy rate (% of people ages 15 and over)
±ª ³
±ª¯
Total fertility rate (births per woman)
Life expectancy at birth (years)
±O°ªL¬
®­ª °
¯ª °
¬ª ²
Aid (% of GNI)
±¯ª °
±­ª °
External debt (% of GNI)
Investment (% of GDP)
¬E³ª °
¬E³ª ²
«³ª °
«·ªM¬
Trade (% of GDP)
Å @¨“—E™@ÓXÔÕÖ\×
Ø Ù`ÚÛÚ×LÕÜ@ÝdÚÞgß@à=Þ@ØáLâEãßlÕÖnäoØãßpãåãäÚsæuç%ÜgÖná
×è@ééè
Population
Í ¬Î«OÏ Ï ²@ΠЪ ³Ñ
Í¬Î«Ï Ï ³Î ЪLѬ
Ò Î Ï Ï Î ÐÑ ®¬ª ­Ò Î Ï Ï Î ÐÑ
²±­ª ­
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²@ª ³
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Table A5.6 summarises at the national level performance against the MDGs. Over the 1990s
significant improvements occurred in life expectancy, adult and youth literacy, child and
infant mortality, and relative literacy among young women. Primary enrolment increased
during the first half of the 1990s, but then stagnated and by 1998/9 had only reached 69%
compared to the target under the Social Action Programme of 88%. These indicators still
remain far below those of many other countries of equivalent per capita income, and the
improvement has been generally slower over the same period than Bangladesh. Total fertility
fell from 5.8 births per woman to 4.7 – still 50% higher than in India. Differences between
urban and rural education and health indicators are closely associated with the growth of
income poverty during the 1990s. There is little evidence of improvement in chronic child
malnutrition (World Bank, 2002b).
Pakistan’ s public services have felt severe fiscal pressure. By the end of the decade, revenue
had fallen from 17% of GDP to 16%, while defence expenditure accounted for 5% of GDP
and debt service for 7.3%. Pakistan has 42% lower health spending per capita than other
countries of equivalent per capita income – in addition there are severe problems relating to
the implementation of public health and education, which has restricted access and quality for
the poor.
A5.2 Prospects for Growth and Poverty Reduction
Pakistan’ s Interim-Poverty Reduction Strategy Paper (I-PRSP) sets out a strategy for
boosting economic growth that is based on continued stabilisation, improving the investment
environment, improving infrastructure and governance reforms (Government of Pakistan,
2001).
The main measures proposed to ensure stabilisation are:
•
•
Improved tax effort
Strengthened public expenditure and debt management especially to address the
imbalance between recurrent and development expenditure, where the latter has been
excessively squeezed.
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•
•
Strengthened role of the State Bank in monetary policy.
Export promotion.
Enabling measures include:
•
•
•
•
Permitting 100% equity basis for foreign participation in industrial projects with full
repatriation of capital, capital gains, dividends and profits, and opening of all sectors
to FDI.
Freeing agricultural prices and improving irrigation to boost agriculture.
Improved financial sector and capital markets regulation.
Privatisation to stem losses of public sector corporations.
Infrastructure focuses on policy reforms and investment in roads and rail, electricity,
telecommunications, and the development of oil and gas reserves.
In relation to governance, the measure proposed focus on:
•
•
•
•
Strengthening local government and decentralization
Civil service reform
Improved access to justice
Fiscal and financial transparency.
In 2000-1, Pakistan made progress towards fiscal stabilisation, with the fiscal deficit falling
from 6.5% to 5.3% of GDP (ADB, 2002) – but this was achieved entirely through reducing
public expenditure as revenues fell from 16.5% to 15.7% of GDP. Financing became
increasingly dependent on flows from international financial institutions. During 2001, large
scale manufacturing fared well and manufactured exports were boosted as a result of
currency depreciation. However exports contracted during the first half of 2002. GDP growth
for 2002 was forecast to be only slightly higher than the 2.6% achieved in 2001, partly as a
result of the impact of the military action in Afghanistan and heightened tension with India
over Kashmir, despite large increased in external aid. The ADB projects a rate of growth of
GDP of 5% for 2003.
ADB (2002) argues that “ Pakistan’ s support to the international community in the fight
against terrorism has provided it with an immense opportunity. If the Government continues
to follow sound macroeconomic policies and to implement the planned economic and
governance reforms, it could fairly quickly achieve rapid and sustainable economic growth
and poverty reduction. However if increased aid flows are used to postpone the necessary
reforms and macroeconomic developments, as happened in the 1980s, Pakistan will be unable
to break out of the existing vicious cycle of low growth and rising poverty” . Noman (2002)
also notes research suggesting there would be considerable economic gains from increasing
trade with India if political tension over Kashmir could be reduced.
Pakistan’ s capacity to exploit its growth and poverty reduction opportunities depends on
more effective macroeconomic management, sustained improvement in investment in human
capital, while containing the economic cost of social conflicts (including the spillover from
Afghanistan and the disruption of Karachi) and the attempt to match India militarily. The
problems are essentially political – the broad outline of the policies that would boost growth
and improve poverty impact are well understood.
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A5.3 Growth and Poverty Reduction Scenarios
Despite the deep social inequalities and particularly unequal access to education, Pakistan’ s
record in the 1980s was one of relatively pro-poor growth, with poverty falling sharply from
the mid-1980s to the early 1990s, suggesting a relatively high GEPR compared to other
countries in the region. The baseline elasticity assumes that an elasticity of 1.45 is achievable
– which is somewhat below the rate of achieved over that period. It is possible that, given the
evidence of increasing inequality, particularly in urban areas, and the continuation of
educational inequality, that it may be harder in the future for growth – especially if driven by
large-scale manufacturing exports rather than from the agricultural sector – to impact on
poverty.
The baseline growth projection is of modest per capita growth (1.5%) in line with
performance over the last two to three years. The high growth scenario (4%) assumes that
progress is made in improving fiscal performance and brings growth in line with but slightly
above the rates achieved currently in Bangladesh, and achieved over the 1980s in Pakistan.
References
Amjad, R., and A.R. Kemal (1997), Macroeconomic Policies and their Impact on Poverty
Alleviation in Pakistan, The Pakistan Development Review, 36:1, Spring.
Government of Pakistan (2001), Interim-Poverty Reduction Strategy Paper, October.
Government of Pakistan (2002), Economic Survey 2001-2002, Economic Advisor’ s Wing,
Finance Division, Islamabad.
Khan, M.H., (2002), When is Economic Growth Pro-Poor? Experiences in Malaysia and
Pakistan, IMF Working Paper WP/02/85, International Monetary Fund.
McCulloch, N., and B. Baulch, …, Simulating the Impact of Policy Upon Chronic and
Transitory Poverty in Pakistan, Institute of Development Studies.
Noman, O., (2002), Economy of Conflict – The Neglected Importance of Karachi and
Kashmir in Pakistan’ s Economic Collapse, Paper presented to Council for Foreign Relations,
New York.
Ranis, G., and F. Stewart (1997), Growth and Human Development: Pakistan in Comparative
Perspective, The Pakistan Development Review, 36:4, Winter.
World Bank (2002a), Country Assistance Strategy for the Islamic Republic of Pakistan,
Report No. 24399-PAK, June 24th, Washington DC.
World Bank (2002b), Pakistan Poverty Assessment – Poverty in Pakistan: Vulnerabilities,
Social Gaps and Rural Dynamics, Report No, 24296-PAK, October 28th, Washington DC.
76
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Annex 6: Vietnam
A6.1 Growth and Poverty Reduction Performance
Economic Growth
Vietnam has enjoyed rapid growth since the adoption of the Doi Moi reforms in 1986. Per
Capita growth rates peaked in 1995. Subsequently the economy was negatively affected by
the impact of the Asian economic slowdown with growth dipping in 1999, before a recovery
over the last two years.
Figure A6.1: Vietnam: Growth Performance 1985-2001
Vietnam - Grow th Perform ance
8
7
6
5
4
3
2
1
0
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
GDP Growt h per capit a
The most marked initial economic change was a sharp reduction in the industrial share of
GDP in the early post reform period, with both agriculture and services increasing their
shares. This reflected the impact of liberalisation on the agricultural sector and the previous
heavy dependence on inefficient state heavy industries. Subsequently the agricultural share of
GDP has fallen sharply, from over 40% in 1987-91 to 25% in 1997-2001. The industrial
share has recovered as a result of new private investment, including FDI which peaked during
1992-6, and was adversely affected by the Asian Crisis. The share of the workforce engaged
in agriculture has fallen much more slowly than agriculture’ s share of GDP.
Exports have increased from just 7% of GDP in the immediate post-reform period to 43% in
1997-2001, and savings and investment shares have also increased from very low levels in
the past.
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Table A6.1:
Indicators of Structural Economic Change
Vietnam
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Employment in agriculture (% of total employment)
Employment in industry (% of total employment)
Employment in services (% of total employment)
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
19821986
36.1
35.3
28.6
19871991
40.3
26.4
33.2
19921996
29.2
29.3
41.5
19972001
25.3
33.9
40.7
..
..
..
74.7
12.1
13.3
70.7
12.7
16.2
68.8
..
..
7.2
0.0
4.8
..
..
18.7
0.5
7.9
11.4
..
34.9
9.2
16.9
26.8
10.2
43.6
5.9
22.3
27.5
5.8
Vietnam remains a significant exporter of agricultural products and also has important oil
reserves, but manufactures have increased to almost half of total exports by 1997-8.
Table A6.2:
Structure of Merchandise Exports and Growth of Total Exports
Vietnam
% of merchandise exports:
1982-6
Agricultural raw materials (%)
16.9
Food (%)
72.4
Fuel (%)
6.3
Manufactures (%)
3.1
Ores and metals (%)
1.3
Export growth (% per annum)
% of merchandise exports:
Beverages, Tobacco, Oils/Fats (%)
Food (%)
Fuel (%)
Manufactures (%)
Crude Materials (%)
1987-91
1992-6
1997-8
21.4
1987-91
2.0
37.9
16.3
27.4
16.4
29.7
1992-6
0.4
36.9
27.0
27.2
8.4
13.7
1997-8
0.4
31.5
17.2
47.2
3.6
Poverty and Inequality
Income poverty has fallen rapidly in Vietnam over the 1990s – from around 75% below the
national poverty line (broadly comparable with the international line) in 1990 to 58% in
1993, and 37% in 1998. Almost 80% of the poor have a household head working in
agriculture on very smallholdings or are landless, and most live in rural (90% of the total),
isolated or disaster prone areas and are disproportionately likely to come from ethnic
minorities. People who have not completed primary education have the highest incidence of
poverty.
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Three regions account for almost 70% of the Vietnam’ s poor – the Northern Uplands (28%),
Mekong Delta (21%) and North Central (18%). Although the Central Highlands is among the
poorest regions it has a small population.
Figure A6.2: Regional Differences in Poverty
Source: AUSAID (2002)
Vietnam’ s level of income inequality is relatively low with a GC of 35 (only Indonesia
among the six focus countries has a more equal income distribution) and growth during the
1990s has been relatively pro-poor. However, with agricultural growth rates slowing in recent
years the prospects are that growth is likely to be becoming less pro-poor. Between the
household surveys of 1993 and 1998, real per capita expenditure growth was generally much
higher in urban than rural areas, and among rural areas was much higher in the South East
and Red River Delta than other rural areas.
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Figure A6.3: Real Per Capita Expenditure Changes
Source: AUSAID (2002).
Vietnam has markedly good health and education indicators for its level of per capita income
with a high level of gender equality in education and a strong improvement in child and
infant mortality over the 1990s. Between 1993 and 1998, primary school enrolment increased
from 87 to 91% for girls and from 86% to 92% for boys, with upper secondary enrolment
increasing from 6 to 27% for girls and 8 to 30% for boys. Child malnutrition remains a
serious problem but has declined from around half to a third of the population. Life
expectancy has increased and total fertility has declined to 2.2 births per woman.
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Table A6.3: Performance Against Millennium Development Goals
êëëì
êïð¤ñò@ó ôOñõnö2ö÷õ'ð¤öø2öŸùúûöðlõü2ñýò§þÿýöð
Population below $1 a day (%)
Poverty gap at $1 a day (%)
Percentage share of income or consumption held by poorest 20%
Prevalence of child malnutrition (% of children under 5)
Population below minimum level of dietary energy consumption (%)
î ôþó öûö ÿýó ûöðEñùðnóø ñð¢ü›öòuÿôEñõ'ó ú@ý
Youth literacy rate (% ages 15-24)
ðúøúõnö!öýòöð+ö"ÿñ
ó õ¤ü
Ratio of young literate females to males (% ages 15-24)
Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
öò@ÿôOö2ôþó ò"ø úð¢õšñ
ó õü
Infant mortality rate (per 1,000 live births)
Immunization, measles (% of children under 12 months)
í*)Eø"ùðúûöøñõ¤öðšýñþöñ õ\þ
Births attended by skilled health staff (% of total)
)$798:Xø2ñ-ñðnó-ñ›ñýò"úõsþöð+òuó;EöñOö
$ #
# $ ( Incidence of tuberculosis (per 100,000 people)
Tuberculosis cases detected under DOTS (%)
Contraceptive prevalence rate (% of women ages 15-49)
Number of children orphaned by HIV/AIDS
ïýÿðlö›öýûó
ðúýøöýõšñÿNõnñóLýñ.ó?ó õlü
$ < #= 2015 target = various (see notes)
;
Forest area (% of total land area)
Nationally protected areas (% of total land area)
GDP per unit of energy use (PPP $ per kg oil equivalent)
CO2 emissions (metric tons per capita)
Access to an improved water source (% of population)
Access to improved sanitation (% of population)
Access to secure tenure (% of population)
# 7göûö úù›ñBAC ú.ñ
2015 target = halt, and begin to reverse, AIDS, etc.
Prevalence of HIV, female (% ages 15-24)
@
2015 target = reduce 1990 maternal mortality by three-fourths
Maternal mortality ratio (modeled estimate, per 100,000 live births)
>
2015 target = reduce 1990 under 5 mortality by two-thirds
Under 5 mortality rate (per 1,000)
úø/.ñõ102)4365
2005 target = education ratio to 100
Ratio of girls to boys in primary and secondary education (%)
+-,
Percentage of cohort reaching grade 5 (%)
%'&
î ììì
êëëë
2015 target = net enrollment to 100
Net primary enrollment ratio (% of relevant age group)
êëëgí
2015 target = halve 1990 $1 a day poverty and malnutrition rates
ñð¢õsýöðþóLùDú@ðE7Xöûö ú@ùø2öýõ
?
$ 2015 target = various (see notes)
Youth unemployment rate (% of total labor force ages 15-24)
Fixed line and mobile telephones (per 1,000 people)
Personal computers (per 1,000 people)
81
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AÌöýöð¤ñóLýò@ó-ôEñõšú@ð
Population
Gross national income ($)
GNI per capita ($)
Adult literacy rate (% of people ages 15 and over)
Total fertility rate (births per woman)
Life expectancy at birth (years)
?
FHG I I G J
K
FG I I G JK ? FLG I I G J
K
FHG I I G J
K
*M G I I G JK $ BM G I I G JK BM G I I G J
K ?HM G I I G J
K
$ ?
;
=
$ ( Aid (% of GNI)
External debt (% of GNI)
Investment (% of GDP)
Trade (% of GDP)
8úÿðôOöNPO*QRTS?U-VEWXWSQY[Z/W\P]^\U_?`(a]bQ
RTcdUa]eafac=Whg[ijY[Rk_Slmml
;
A6.2 Prospects for Growth and Poverty Reduction
ADB (2002) noted that the Vietnamese economy remains fast-growing with stable prices and
a sustainable position in relation to public finance and external debt, while more progress is
required in state enterprise and banking sector reform. The medium-term outlook is for
increasing growth with rising investment and growth concentrated in industry and
construction, though the prospects for agriculture are relatively depressed. Agriculture grew
at 5.6% per annum through the 1990s. The bilateral trade agreement with the USA and
further scope for increasing manufactured exports are the basis for projections of an
acceleration of export growth, while FDI will increase with significant investments in oil, gas
and power sectors.
Vietnam’ s Comprehensive Poverty Reduction and Growth Strategy sets out a growth strategy
based on maintaining a prudent fiscal and monetary stance and strengthening the legal
environment for all enterprises, including reform of the State Owned Enterprise sector. The
Strategy notes that despite the gains over the last decade, “ Vietnam’ s growth path is not yet
on a securely sustainable footing” , and questions whether the growth performance of the
1990s can be repeated, noting in particular institutional, human capital, and environmental
constraints including the lack of a sound system of economic laws and the ineffectiveness of
the public administrative apparatus.
A6.3 Growth and Poverty Reduction Scenarios
The baseline growth scenario is a continuation of the performance of 1997-2001. There are
however good reasons to think that growth rates can be improved towards the level achieved
by China, so the high growth rate projection matches that of China in 1997-2001.
There is more uncertainty about the future impact of growth on poverty. During the 1990s the
growth path has been relatively pro-poor, but this partly reflects the boost to agriculture from
liberalisation and decollectivisation, and the agricultural sector is lagging compared to the
rest of the economy. Detailed information on trends in income inequality are not available
though Ravallion classifies Vietnam as a country marked by economic growth with growing
inequality and the evidence suggests that income inequality is increasing as a result of the
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divergence between rural and urban growth rates and the regional pattern of growth. The
experience of other countries suggests that this pattern is likely to be accentuated by
following the Chinese style growth path. So the baseline GEPR is set lower than one based
on performance over the 1990s – with the latter used for the high poverty-response scenario.
References
Ausaid (2002), Vietnam Poverty Analysis, Centre for International Economics, Sydney and
Canberra.
Socialist Republic of Vietnam (2002), The Comprehensive Poverty Reduction and Growth
Strategy, Hanoi, May.
World Bank (2002), Vietnam: Delivering on its Promise, Development Report 2003, Report
No. 25050-VN.
83
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Annex 7: Cambodia, Nepal, Sri Lanka and East Timor
A7.1 Cambodia
Figure A7.1: Cambodia Growth Performance 1980- 2001
Cam bodia - Grow th Perform ance
10
8
6
4
2
0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
-2
-4
GDP Growth per capita
Table A7.1:
Growth Per Capita: Five Year Averages
GDP growth per capita
Cambodia
1982-86
1987-91
2.8
1992-96
2.8
1997-2001
1.3
Major features:
•
Cambodia has witnessed fairly stable economic growth in the past decade, except for
the period of 1997- 98 when growth suffered as a result of the impact of the Asian
financial crisis. Economic growth reached a maximum of 5.3% in 2001.
•
A major driver of growth has been exports of manufactured goods which total 74.2%
of total merchandise exports, with the United States a major market.
•
The agricultural sector currently employs over 80% of the country’ s labour force,
70% of which is poor. Production in this sector is restricted due to neglected irrigation
systems and lack of phosphate fertilisers. These difficulties were intensified by
84
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localised insecurity caused by small-scale invasions of anti-Vietnamese Khmer
insurgents.
•
Rapid export growth and increases in foreign direct investment have sustained
economic growth at a moderate level, by comparison for example with Vietnam.
Table A7.2:
Indicators of Structural Economic Change
Cambodia
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
Exports of goods and services (annual % growth)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
1987-91 1992-96
52.7
50.5
14.7
14.0
32.7
35.5
1997-2001
44.5
17.2
39.5
11.2
4.3
6.2
18.1
4.5
17.4
4.9
7.0
16.6
4.9
N/A
N/A
3.7
3.7
N/A
Source: WDI 2002
Despite the economic and political disruption caused by civil war and low per capita
incomes, Cambodia’ s health and education indicators are relatively good compared for
instance to South Asian countries with significantly higher per capita incomes. However,
there is evidence of decline rather than progress in these indicators over the 1990s.
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Table A7.3:
Performance Against the Millennium Development Indicators
noqpsrutwvHxyoznLt{L|C}~€~t1‚x„ƒ†…
‡9ˆ‰;Š=‹ŒHŽh
‘‰?
’[‰ Š(“ŽkŒ”[ŽTŒB•‰ =–—“!’˜k‰?‰ Ž4‰ Œ
”“
’‰ Š$“=ŽTBŸŽh” !‘¡
Υ
”eŽ„¢B“’/£¤”
™*ž
™šš›
Population below $1 a day (%)
Poverty gap at $1 a day (%)
Percentage share of income or consumption held by poorest 20%
Prevalence of child malnutrition (% of children under 5)
Population below minimum level of dietary energy consumption (%)
Š=‰;=•‘£‰ •”¯(“ˆ¡”k‰? *“”b¢B
’[£Š#“Ž°‰;Œ
®
Youth literacy rate (% ages 15-24)
² ³”Œ -ŒŽTB¤
’”j
´£“ˆ?‰ Ž¢
Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
¶'· 
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¸¡”Œ•* -“Žk”T
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Contraceptive prevalence rate (% of women ages 15-49)
Number of children orphaned by HIV/AIDS
Incidence of tuberculosis (per 100,000 people)
Tuberculosis cases detected under DOTS (%)
¯=£”b!•‰”Œ *Žk“ˆ¯£¯ÄŽ„“‰?
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Nationally protected areas (% of total land area)
GDP per unit of energy use (PPP $ per kg oil equivalent)
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Access to an improved water source (% of population)
Access to improved sanitation (% of population)
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2015 target = various (see notes)
Forest area (% of total land area)
Access to secure tenure (% of population)
¥¥
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2015 target = halt, and begin to reverse, AIDS, etc.
Prevalence of HIV, female (% ages 15-24)
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2015 target = reduce 1990 maternal mortality by three-fourths
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2015 target = halve 1990 $1 a day poverty and malnutrition rates
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2015 target = various (see notes)
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Youth unemployment rate (% of total labor force ages 15-24)
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Trends in Poverty and Growth in Asia
Oxford Policy Management
Æ6”“ˆ‰?
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Trends in Poverty and Growth in Asia
Oxford Policy Management
A7.2 Nepal
Nepal’ s economic growth rate has fluctuated between 2% and 4% per capita with little sign
of acceleration during the 1990s. Agricultural output share has fallen whereas the industrial
and service sectors have increased their share of the country’ s value added. Export shares of
GDP have doubled over the 20 year period, similar to Bangladesh and India, with a marked
shift in export composition away from agricultural produce towards manufactured goods.
Savings, investment and foreign direct investment remain low.
Table A7.4:
Growth Per Capita: Five Year Averages
GDP growth per capita
Nepal
1982-86
2.0
1987-91
2.6
1992-96
2.5
1997-2001
2.5
Figure A7.2: Nepal Growth Performance: 1982- 2001
Nepal - Growth Performance
8
6
4
2
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
0
-2
-4
-6
GDP Growth per capita
88
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Table A7.5:
Indicators of Structural Economic Change
Nepal
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
1982- 86 1987- 91 1992-96
57.1
50.5
43.1
13.8
16.5
21.9
29.1
33
35
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
Table A7.6:
Nepal
Nepal
11.3
0.1
10
17.9
0
20.9
0.2
13.5
20.8
0.1
23.8
0.2
14.9
N/A
0.2
Structure of Merchandise Exports and Total Export Growth
%of Merchandise Exports
Agricultural raw materials exports
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
Table A7.7:
11.1
0
10.5
18.3
0
19972001
40.2
22.5
37.3
1982- 86
1987-91
10.4
34.7
0.0
49.8
0.4
2.6
17.3
N/A
72.0
0.4
1992-96 1997-2001
0.8
8.8
0.0
87.4
0.1
0.5
13.0
0.0
74.2
0.6
Significance of International Development Assistance
Aid per capita (current US$) Aid (% of central government expenditures)
16.9
45.6
Data on education and health indicators suggests a similar pattern to the pattern of India and
Bangladesh over the 1990s – low levels of primary enrolment and literacy, high levels of
gender inequality and child and infant mortality, but evidence of significant improvements in
these indicators over the 1990s.
89
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Table A7.8:
Performance Against the Millennium Development Goals
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ù ú=þþ"!
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2015 target = halve 1990 $1 a day poverty and malnutrition rates
Population below $1 a day (%)
()(
*+%(,+
(-(
()(
Poverty gap at $1 a day (%)
()(
.(,+
(-(
()(
Percentage share of income or consumption held by poorest 20%
()(
+%( /
(-(
()(
Prevalence of child malnutrition (% of children under 5)
()(
01(32
0+%()4
()(
(-(
7*%( 6
()(
Population below minimum level of dietary energy consumption (%)
8:9<;
=>,?
@%?"AB> @%?CDEFGCH>JIECLK?MNA%;OEPQ>,RB
45.( 6
2015 target = net enrollment to 100
S)S
S-S
S-S
S)S
Percentage of cohort reaching grade 5 (%)
T
U%S V
S-S
S-S
S)S
Youth literacy rate (% ages 15-24)
WX S X
T W S,Y
TZS W
X VSJT
Net primary enrollment ratio (% of relevant age group)
[]\CRI^RP?_?BM?C`?aA%EFJ> PK
2005 target = education ratio to 100
Ratio of girls to boys in primary and secondary education (%)
T
U%S b
Xc S b
X ZS,U
S)S
Ratio of young literate females to males (% ages 15-24)
W VS3Y
W bS,U
T W Sc
TTS3Y
S)S
S-S
S-S
S)S
c Sb
S-S
dU%S V
S)S
Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
egf ?MA%;?;h=>3F,MiIRCjPEF3> PK
2015 target = reduce 1990 under 5 mortality by two-thirds
Under 5 mortality rate (per 1,000)
d c bS V
ddObS V
S-S
dOV W S3Y
Infant mortality rate (per 1,000 live births)
dOVdS3U
YZS V
S-S
T
Y%S V
T X SV
Y c SV
Y c SX
S)S
Immunization, measles (% of children under 12 months)
kl IiGCR@%?I^EPH?CBEF%=?EF Pm=
2015 target = reduce 1990 maternal mortality by three-fourths
Maternal mortality ratio (modeled estimate, per 100,000 live births)
S)S
bS V
Births attended by skilled health staff (% of total)
n^oRIipE
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c U%S V
S-S
S)S
S-S
S)S
2015 target = halt, and begin to reverse, AIDS, etc.
Prevalence of HIV, female (% ages 15-24)
S)S
S-S
VS,U
S)S
Contraceptive prevalence rate (% of women ages 15-49)
S)S
UZS V
S-S
S)S
Number of children orphaned by HIV/AIDS
S)S
S-S
UyzTVVS V
S)S
Incidence of tuberculosis (per 100,000 people)
S)S
S-S
UhV
ZS V
S)S
Tuberculosis cases detected under DOTS (%)
S)S
S-S
WW S V
S)S
{i| B%D
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2015 target = various (see notes)
c U%S3Y
S-S
S-S
UY%S c
S)S
Y%S b
Y%S b
S)S
GDP per unit of energy use (PPP $ per kg oil equivalent)
U%S X
c Sc
c S3T
S)S
CO2 emissions (metric tons per capita)
VS V
VS)d
VS)d
S)S
Access to an improved water source (% of population)
XX S V
S-S
S-S
bdS V
Access to improved sanitation (% of population)
Forest area (% of total land area)
Nationally protected areas (% of total land area)
U%dS V
S-S
S-S
UY%S V
Access to secure tenure (% of population)
S)S
S-S
S-S
S)S
Youth unemployment rate (% of total labor force ages 15-24)
S)S
S-S
S-S
S)S
c S-d
W S)d
ddS3T
ddS Z
S)S
dS,U
U%S,Y
c SV
~ u ?@?F,RGE€F RpEF\ECjPB?CD=>JG:RC u ?
@%?F,RGI?B
P
2015 target = various (see notes)
Fixed line and mobile telephones (per 1,000 people)
Personal computers (per 1,000 people)
90
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Oxford Policy Management
<?B?CEF>JBMN> ;OEPRCD
Population
Gross national income ($)
dObS)d
‚:ƒ „ „ ƒ …†
W S Vˆ ƒ „ „ ƒ …†
GNI per capita ($)
Adult literacy rate (% of people ages 15 and over)
UhVS W
‚:ƒ „ „ ƒ …† U U%SJT ‚‡ƒ „ „ ƒ …†
T S,Uˆ ƒ „ „ ƒ …†
W S3Tˆ ƒ „ „ ƒ …†
U c SV
‚:ƒ „ „ ƒ …†
TS X ˆ ƒ „ „ ƒ …†
UUhVS V
UUhVS V
U c VS V
U W VS V
c VS3T
chX S V
W VS X
W dS b
TS c
W SX
S)S
W Sc
Life expectancy at birth (years)
T c SX
T X Sc
S)S
TbS Z
Aid (% of GNI)
ddS3T
ZS X
X Sb
External debt (% of GNI)
WW S W
T c SZ
T
Y%S3U
X SZ
W ZS X
Investment (% of GDP)
dObS W
UTS3U
UhVSJT
U W Sc
c dS X
v RAC;O?‰‹ŠŒQŽJ^’‘“h‘Ž)Œ
”•–‘—˜™5—%š)›Oœ˜LŒ%H‡%œ˜žœŸœh‘ N¡`”HšJŽ¢££¢
TbS b
T
U%S X
TTS b
Total fertility rate (births per woman)
Trade (% of GDP)
91
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A7.3 Sri Lanka
Table A7.9:
GDP Growth per Capita: Five Year Averages
GDP growth per capita
Sri Lanka
1982-86
3.2
1987-91
2.1
1992-96
4.0
1997-2001
3.3
Despite the Tamil separatist civil war, Sri Lanka went through a period of sustained growth,
with the exception of 1987-88, until 2001 when the economy was hit by the global slow
down in activity which reduced demand for manufactured exports from the West. Higher oil
prices led to smaller profits and a drought seriously affected activity in the agricultural sector.
A terrorist attack on the country’ s only international airport, increased docking prices and the
threat of war have, in addition, damaged the tourist and shipping industries. A change of
Government has generated expansionary monetary policy which had the adverse effect of
increasing Government deficit without improving consumption. GDP growth has therefore
slowed down due to an amalgamation of unfavourable trends.
•
Exports have increased as a share of GDP, with a strong shift away from food,
agricultural raw materials and fuel towards manufactures (from 31% to 75%).
•
Income poverty is low (6.6% below the international poverty line in 1995) though a
core of chronic poverty in rural areas remains a problem.
•
Education, fertility and health indicators are exceptional by South Asian standards,
though education has not seen improvements over the 1990s.
Figure A7.3: Sri Lanka Growth Performance: 1980- 2001
Sri Lanka - Growth Performance
6
5
4
3
2
1
0
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
GDP Growth per capita
92
1994
1995
1996
1997
1998
1999
2000
2001
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Table A7.10: Indicators of Structural Economic Change
Sri Lanka
Agriculture, value added (% of GDP)
Industry, value added (% of GDP)
Services, etc., value added (% of GDP)
1982- 86 1987- 91 1992- 96
27.6
26.4
23.9
26.3
26.5
26.1
46
47.1
50
Exports of goods and services (% of GDP)
Foreign direct investment, net inflows (% of GDP)
Gross domestic savings (% of GDP)
Gross fixed capital formation (% of GDP)
Gross foreign direct investment (% of GDP)
26.5
0.7
13.6
26.5
0.7
27.3
0.6
12.9
22.4
0.6
33.9
1.2
15.4
25
1.3
19972001
20.4
27.0
52.6
37.2
1.6
18.6
26.2
1.7
Table A7.11: Structure of Merchandise Exports and Total Export Growth
Sri Lanka
% of Merchandise Exports
Agricultural raw materials exports
Food exports
Fuel exports
Manufactures exports
Ores and metals exports
1982- 86
1987-91
11.7
46.6
9.2
31.3
1.1
7.8
34.2
1.5
52.5
1.2
1992-96 1997- 2001
3.7
21.9
0.1
71.6
0.7
Table A7.12: Significance of International Development Assistance
Sri Lanka
Aid per capita (current US$) Aid (% of central government expenditures)
12.9
6.6
93
2.0
21.1
0.0
75.4
0.2
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Oxford Policy Management
Table A7.13: Performance Against the Millennium Development Goals
¤¥¦¨§w©«ª«¬­©¯®‡°²±³ªµ´¥O¶¸·:¥°º¹¦»½¼
¾‹¿3À,Á
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ÅÇÇÔÅÊÇÕÇ"ÖÃËÇÊjÅ$×ÉÄ%ÈØÆÙÄ%ÚÇÊ
ÎÓ
ÎÏÏÐ
ÎÏÏÑ
ÎÏÏÏ
ÒÐÐÐ
2015 target = halve 1990 $1 a day poverty and malnutrition rates
Population below $1 a day (%)
Û-Û
ÜÛ Ü
Û-Û
Û-Û
Poverty gap at $1 a day (%)
Û-Û
ÝÛ Þ
Û-Û
Û-Û
Percentage share of income or consumption held by poorest 20%
Û-Û
ßÛ Þ
Û-Û
Û-Û
Prevalence of child malnutrition (% of children under 5)
Û-Û
àá%Û â
Û-Û
Û-Û
Û)Û
áà%Û Þ
Û-Û
Population below minimum level of dietary energy consumption (%)
Ò:ã
Á
ÆÀ,Ç
Ë%Ç"ÙÄÀ Ë%ÇÊäÉ¿ÖÊHÀJÕÉÊL×ÇÈNÙ%ÁOÉÅQÀ,ÃÄ
áâÛ Þ
2015 target = net enrollment to 100
Û-Û
Û)Û
â%å%Û Þ
Û-Û
Percentage of cohort reaching grade 5 (%)
â
æÛ æ
ßà%Û3à
Û-Û
Û-Û
Youth literacy rate (% ages 15-24)
âçÛ)Ý
âÜÛ Þ
âÜÛ3å
âÜÛ ß
Ratio of girls to boys in primary and secondary education (%)
âßÛ,å
ââÛ Þ
ââÛ Þ
Û-Û
Ratio of young literate females to males (% ages 15-24)
âßÛ,à
ââÛ Þ
ââÛJç
ââÛ Ü
Û-Û
àhÞÛ3å
à%ÝÛ-Ý
Û-Û
æÛ â
Û)Û
Û-Û
Û-Û
Net primary enrollment ratio (% of relevant age group)
è]éÊÃÕ^ÃÅÇÚÇÄÈÇÊ`ÇêÙ%É¿JÀ Å×
2005 target = education ratio to 100
Share of women employed in the nonagricultural sector (%)
Proportion of seats held by women in national parliament (%)
ëgìíîï%ðíðhñò3ó,îiôõöj÷øó3ò ÷ù
2015 target = reduce 1990 under 5 mortality by two-thirds
Under 5 mortality rate (per 1,000)
úû%ü ý
þ5ÿü ý
ü-ü
þ%ü ÿ
Infant mortality rate (per 1,000 live births)
þü
þü
þü ÿ
þü ý
Immunization, measles (% of children under 12 months)
ýü ý
%ü ý
ÿ
ü ý
ü-ü
Oôöõ%íô^ø÷Híöøó%ñíøó ÷mñ
2015 target = reduce 1990 maternal mortality by three-fourths
ü-ü
ýü ý
ü-ü
ü-ü
ü ý
ÿ
ü ý
ü-ü
ü-ü
Maternal mortality ratio (modeled estimate, per 100,000 live births)
Births attended by skilled health staff (% of total)
õôø
÷ !#"$‹ôøó øöHò øø%î"õ÷ñíö`îNò &Oí%ø&í&
2015 target = halt, and begin to reverse, AIDS, etc.
Prevalence of HIV, female (% ages 15-24)
ü-ü
ü)ü
ýü-þ
ü-ü
Contraceptive prevalence rate (% of women ages 15-49)
ü-ü
ü)ü
ü-ü
ü-ü
Number of children orphaned by HIV/AIDS
ü-ü
ü)ü
ýýü ý
ü-ü
Incidence of tuberculosis (per 100,000 people)
ü-ü
ü)ü
ÿü ý
ü-ü
Tuberculosis cases detected under DOTS (%)
ü-ü
ü)ü
ü ý
ü-ü
'(&
ïöLíí% ò)öõ%ôí%÷Høó &ï&}÷$øòø%òJóJò ÷ù
2015 target = various (see notes)
Forest area (% of total land area)
Nationally protected areas (% of total land area)
GDP per unit of energy use (PPP $ per kg oil equivalent)
ûü )
ü)ü
ü-ü
ûhýü ý
ü-ü
þû%ü3û
þû%ü
ü-ü
ü,û
ü
ü-þ
ü-ü
ýü,ú
ýü3û
ýü )
Access to an improved water source (% of population)
ü ý
ü)ü
ü-ü
û%ü ý
Access to improved sanitation (% of population)
ú%ü ý
ü)ü
ü-ü
û%ü ý
ü-ü
ü)ü
ü-ü
ü-ü
CO2 emissions (metric tons per capita)
Access to secure tenure (% of population)
* !‹í íó,õ%ø,+€ó õ-øó%.øöj÷/íö0&ñò21õö3!wí4%íó,õ-ôí-
÷
ü-ü
2015 target = various (see notes)
ûû%ü,û
ú5)ü
úü3ú
ü-ü
Fixed line and mobile telephones (per 1,000 people)
%ü,ú
þ6)ü-þ
)ÿü û%ü,ú
Personal computers (per 1,000 people)
ýü,ú
þü-þ
ü %ü)þ
Youth unemployment rate (% of total labor force ages 15-24)
94
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Oxford Policy Management
+<í-íöøóòîNò ðOø÷õö0&
Population
Gross national income ($)
GNI per capita ($)
þ %ü ý
728 9 9 8 :;
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Trends in Poverty and Growth in Asia
Oxford Policy Management
A7.4 East Timor
Table A7.14: Inequality and Poverty Indicators
Inequality data
East Timor
Gini Index
Inequality Ratio (Top to Bottom quintile)
Bottom quintile
2nd quintile
3rd quintile
4th quintile
top quintile
2001
38
658
7
11
15
22
45
Poverty Data
East Timor
Population below $1 a day (% of total population)
Population below 2$ a day %of total population)
Population below national poverty line (% of total pop)
Rural (% of pop below national poverty line)
Urban (% of pop below national poverty line)
2001
20
63
40
44
25
Source: ADB
Figure A7.4: Fluctuations in GDP: 1998-2003
Source: ABD Country Report 2001
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Trends in Poverty and Growth in Asia
Oxford Policy Management
East Timor became independent of Indonesia in March 2002 after a transitional period of
three years. Statistical Data are scarce or not reliable. However:
•
Agriculture remains the main source of income and during the transition investment
was made to rebuild seed stocks and irrigation systems and improve access to
fertilizers.
•
GDP growth is estimated at 18% in 2001and 15% in 2000.
•
Inequality and poverty persist, 63% of the population lives on less than USD2 a day.
•
The financial sector is small and does not provide an adequate climate for investment
and savings.
•
Most of the prospects for future growth lie in an ongoing oil project in the Timor Sea
which has encouraged imports and created a deficit in the current account.
•
East Timor’ s major challenge, however, lies in its lack of human capital.
97