Download An Overview of Poverty Reduction Strategies1

An Overview of Poverty Reduction
Strategies: First FYP to Fifth FYP
Presentation by
Dr. Muhammad G. Sarwar
Civil Service College, Dhaka
13 June 2011
Presentation Contents
• Poverty in Post-Independent Bangladesh
• Historical Context of Mid-Term Planning
• Planning for Poverty Reduction
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First Five Year Plan 1973-78
Tow Year Plan 1979-80
Second Five Year Plan 1981-85
Third Five Year Plan 1986-90
Fourth Five Year Plan 1991-95
Fifth Five Year Plan 1997-2001
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Poverty in Post-Independent
Bangladesh
Types of Poverty
1963/64
1973/74
Absolute Poverty
40
79
Extreme Poverty
05
42
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Planning for Poverty Reduction:
Bangladesh Development Planning is based on the State
Constitution
(Part II, Articles 9 -20)
1.
2.
3.
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5.
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8.
Article 14: emancipation of the peasants and workers from
all forms of exploitation;
Article 15: provision of basic necessities of life- food,
clothing, shelter, education, and medical care;
Article 16: rural and agricultural development;
Article 17: free and compulsory education;
Article 18: improvement of nutrition and public health;
Article 19: equality of opportunity to all citizen;
Article 10: participation of women in national life.
Article 9: promotion of local govt. institutions for improving
public service delivery;
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Historical Context of Mid-Term
Planning
• After Bolshevik Revolution Soviet Union
initiated mid-tem five year centralized state
planning in early 1920s
• Newly emerged decolonized independent
countries in Asia and Africa followed the midterm five year centralized mixed economy
planning in 1950s after the Second World War
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1970s: Dominant Development Planning
Paradigm
In 1970s Dominant Development Planning Paradigm
was Keynesian economic model that advocates state
interventions in economic management. Technical
framework mostly based on H-D model along with
with I-O tables
– First Five Year Plan 1974 – 1978
– Two Year Plan 1979 -1980
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First Five Year Plan 1973-78:
Plan Objectives
– To reduce poverty
– To continue and complete the reconstruction work to the
benchmark of 1969/70
– To expand the output of essential consumption items
– To arrest the inflation (rising trend in the general price
level)
– To increase the GDP growth rate
– To increase per capita income
– To attain self-sufficiency in food-grain production
– To reduce population growth rate
– To reduce dependency on foreign aid
– To consolidate the gains made so far in socialist
transformation of Bangladesh
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First Five Year Plan: targets
• Increasing GDP growth rate to 5.5% per annum
• Increase per capita income at the rate of 2.5% per
annum
• Employment creation of 54 lakh man-year (against
39.3 lakh man-year additional employment
requirement in the Plan period)
• Reducing dependency on foreign aid to 27% of total
investment requirement
• Reducing population growth rate to 2.8% from 3.0%
per annum
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First Five Year Plan:
Plan outlay and its financing
(Crore Taka at 1972/73 prices)
Plan Outlay
Public
4,455
3,952
(88.7%)
Private
503
(11.3%)
Financing
Domestic Recourse
2,656
(59.6%)
Foreign Aid
1,799
(49.4%)
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First Five Year Plan: strategies
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Recovery of the war damaged economy
Growth of Output and Income
Equitable distribution of income
Employment creation (generating 54 lakh man-year in
crop agriculture, rural works programme, construction,
industry, and social sectors against 39.3 lakh man-year
additional employment requirement in the Plan period)
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First Five Year Plan:
achievements /failures
• GDP growth rate per annum: 4.0% (GDP grew
by 44%)
• Domestic resource mobilization: 20% of Plan
outlay
• Money supply grew by 148%, so was the
general price level
• Terms of trade deteriorated to 69 by 1978
from 100 in 1973
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1980s: Dominant Development Planning
Paradigm
Keynesian model was discredited 1098s
due to bad performance of the State
Enterprises, however, Keynesian Planning
model continued. Technical Framework
incorporated SAM in addition to I-O table
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Second Five Year Plan (1981 – 1985)
Third Five Year Plan (1986 -1990)
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Second Five Year Plan 1981-85:
Plan Objectives/targets
– Attaining 5.4 % GDP growth rate per annum on
average
– Equitable growth
– Expansion of employment
– Eliminate illiteracy and achieve universal primary
education
– Reducing population growth rate
– Strengthening local government
– Domestic resource mobilization to attain selfreliance
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Second Five Year Plan 1981-85:
Plan Strategies
• Emphasis on rural development
• Increasing agricultural production
• Regional / spatial planning to reduce regional
disparity
• Developing Institutional Framework for local level
production planning
• Industrialization
• Balancing public and private sector development
• Population planning
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Second Five Year Plan 1981-85:
Plan Outlay and Financing
(Crore Taka at 1979/80 prices)
Plan Outlay
Public
17,200
11,100
(64.5%)
Private
6,100
(35.5%)
Financing
Domestic Recourse
9,100
(52.9%)
Foreign Aid
8,100
(47.1%)
15
Third Five Year Plan 1986-90:
Objectives/targets
• Reduction of population growth rate from 2.4% to 1.8%
• Expansion of productive employment to reduce
unemployment
• Attaining universal primary education and HRD
• Development of technological base for structural change in
the economy
• Attaining food self-sufficiency
• Satisfying of basic consumption needs
• Accelerating Economic growth for poverty reduction
• Domestic resource mobilization for attaining self-reliance
• Upazila development program
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Third Five Year Plan 1986-90:
Plan Outlay and Financing
(Crore Taka at 1984/85 prices)
Plan Outlay
Public
38,600
25,000
(64.8%)
Private
13,600
(35.2%)
Financing
Domestic Recourse
17,572
(45.5%)
Foreign Aid
21,028
(54.5%)
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1990s: Dominant Development Planning
Paradigm
• In 1990s Neo-liberal ‘Washington Consensus’
emerged that advocated market liberalization
for higher economic growth and targeted
safety-net programs for poverty reduction.
• Keynesian Planning Model along with neoclassical growth model with more emphasis
on market economy followedFourth Five Year Plan (1991 – 1995)
Fifth Five Year Plan (1998 – 2002)
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Fourth Five Year Plan 1991-95
• Plan Objectives/targets
– Attaining 5% per annum average economic
growth in the plan period
– Poverty Alleviation and HRD
– Increasing self-reliance
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Fourth Five Year Plan 1991-95:
Strategies
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Export led economic growth
Intra-sectoral balance in sectoral planning
Efficiency culture in the economy
Mainstreaming women development in Planning
Reduction of population growth rate
Restructuring administrative system
Increasing private and public investment
Community participation through NGOs
Local level (district level) planning
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Fourth Five Year Plan 1991-95:
Plan Outlay and Financing
(Crore Taka at 1989/90 prices)
Plan Outlay
Public
62,000
34,700
(56.0%)
Private
27,300
(44.0%)
Financing
Domestic Recourse
43,400
(70.0%)
Foreign Aid
18,600
(30.0%)
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Fifth Five Year Plan 1997-2001:
objectives
• Poverty alleviation through accelerated economic
growth rate
• Employment generation
• Creating an equitable soceity
• Attaining food self-sufficiancy
• Human Resources Development
• Development of Physical Infrastructure
• Development of CHT, north-west and coastal regions
22
Fifth Five Year Plan 1997-2001:
objectives (contd.)
• Reducing population growth rate
• Strengthening scientific and technological
base
• Protection of environment
• Closing gender gap
• Establishing social justice
• Development of local governments.
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Fifth Five Year Plan 1997-2001:
targets
• Achieving on average 7% per annum GDP
growth rate in the plan period
• Reducing population growth rate to 1.3 %
per annum at the terminal year of the
Plan.
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Fifth Five Year Plan 1997-2001:
plan outlay and financing
(Crore Taka at 1996/97 prices)
Plan Outlay
Public
195,952
85,894
(43.8%)
Private
110,058
(56.2%)
Financing
Domestic Recourse
151,976
(77.5%)
Foreign Aid
43,976
(22.5%)
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Five Year Plans:
Public vs. Private Investment
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Financing Five Year Plans:
Domestic vs. Foreign aid
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Comparative Performance of Five Year Plans
(Million Taka at respective base year prices)
Plan Period Plan Size
Actual
Growth
Realized
Expenditure Targets (%) Growth
Rate (%)
First Plan
44,550
20,740
5.5
4.0
Two Year
Plan
38,610
33,590
5.6
3.5
Second Plan 172,000
152,970
5.4
3.8
Third Plan
386,000
270,110
5.4
3.8
Fourth Plan 620,000
598,480
5.0
4.2
7.0
5 .1
Fifth Plan
1959,521
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Realized GDP Growth Rate in MidTerm Plans
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Trends in Poverty and Inequality
over the Plan Periods
1973
Absolute
Poverty
(Headcount
Rate)
Gini Index of
Inequality
79%
1981
1991
2000
2005
58.8%
49.8%
40.0%
0.259
0.306
0.467
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Poverty Trends. 1974 - 2005
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Inequality Trend 1991 - 2005
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Critique of Development Planning in
Bangladesh
• All the Five Year Plans were implemented only partially
indicating the lack of political will and institutional capacity to
implement successive Five Year Plans
• Non of the Five Year Plan did set specific poverty reduction
targets implying stated ‘poverty reduction’ objective has been
a political economy rhetoric to some extent
• While Bangladesh has a success story to tell to some extent
regarding ‘poverty reduction’ but the down side of planning
has been the rising inequality
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Thanks !
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