1

Poverty in Bangladesh: Poverty in Bangladesh: Creating Opportunities & Bridging the East-Creating Opportunities & Bridging the East-

West divideWest divide

Ambar Narayan, Hassan ZamanAmbar Narayan, Hassan Zaman(based on World Bank Poverty Assessment for Bangladesh 2008)(based on World Bank Poverty Assessment for Bangladesh 2008)

April 20, 2009April 20, 2009

2

Poverty trends in recent yearsPoverty trends in recent years

Poverty headcount rates (%)Poverty headcount rates (%)

Upper PLUpper PL Lower PLLower PL

20002000 20052005 20002000 20052005

NationalNational 48.948.9 40.040.0 34.334.3 25.125.1

UrbanUrban 35.235.2 28.428.4 19.919.9 14.614.6

RuralRural 52.352.3 43.843.8 37.937.9 28.628.6

NotesNotes: Using : Using official Poverty Linesofficial Poverty Lines estimated for HIES (2005, 2000) estimated for HIES (2005, 2000)

Poverty rate reduced from 49% to 40% during 2000-2005Poverty rate reduced from 49% to 40% during 2000-2005• Similar reduction for extreme poverty rate (34% to 25%) Similar reduction for extreme poverty rate (34% to 25%) • Significant reduction in both urban and rural povertySignificant reduction in both urban and rural poverty

No. of people in poverty fell by 6 million, in extreme poverty by No. of people in poverty fell by 6 million, in extreme poverty by 8 million8 million

But nearly 56 mn. still in poverty, including But nearly 56 mn. still in poverty, including 35 mn35 mn. in extreme . in extreme povertypoverty

““Consumption” poverty: inability to purchase what is necessary to Consumption” poverty: inability to purchase what is necessary to satisfy “basic needs”, including minimum calorie needs and non-food satisfy “basic needs”, including minimum calorie needs and non-food

itemsitems

3

Long-term poverty trends (91-92 to 2005)Long-term poverty trends (91-92 to 2005)

• Poverty rate fell from 57 to 40%, extreme poverty rate from 41 to 25%Poverty rate fell from 57 to 40%, extreme poverty rate from 41 to 25%– Highest reduction in poverty during 2000-2005Highest reduction in poverty during 2000-2005

• Consumption growth has benefited the poorConsumption growth has benefited the poor– Stable relative inequality (Gini index for consumption at 0.31) since 1995-Stable relative inequality (Gini index for consumption at 0.31) since 1995-

9696– During 2000-2005, consumption growth among the bottom 30% higher During 2000-2005, consumption growth among the bottom 30% higher

than the averagethan the average

Upper Poverty Line

0

20

40

60

1991/92 1995/96 2000 2005

Hea

dco

un

t ra

te (

%)

Rural Urban National

Lower Poverty Line

0

20

40

60

1991/92 1995/96 2000 2005

Hea

dco

un

t ra

te (

%)

Rural Urban National

4

Rich-poor gaps

• Ratios of percentiles of per capita exp have remained mostly Ratios of percentiles of per capita exp have remained mostly unchanged between 2000 and 2005 (e.g. p90:p10, p50:p10) unchanged between 2000 and 2005 (e.g. p90:p10, p50:p10) – little change in – little change in relative inequalityrelative inequality

• But gaps between percentiles have increased (e.g. p90-p10, But gaps between percentiles have increased (e.g. p90-p10, p50-p10) – increase in p50-p10) – increase in absolute inequalityabsolute inequality

Absolute differences between percentiles of real per capita exp: 2000 and 2005

0

400

800

1,200

1,600

p90-p10 p90-p50 p50-p10 p75-p25 p75-p50 p50-p25

Gaps between pctiles of real per capita exp

Tak

a (c

on

stan

t 20

05 r

ura

l D

hak

a p

rice

s)

2000 2005

Ratio of percentiles of real per capita exp: 2000 and 2005

0

1

2

3

4

p90/p10 p90/p50 p50/p10 p75/p25 p75/p50 p50/p25

Ratios of pctiles of real per capita exp

Tak

a (c

on

stan

t 20

05 r

ura

l D

hak

a p

rice

s)

2000 2005

5

Bangladesh compares well with South Asian Bangladesh compares well with South Asian countries in poverty reduction…..countries in poverty reduction…..

0.0

1.0

2.0

3.0

4.0

5.0

Bangla

desh

(2000-0

5)

India

(1994-0

0)

Nepal

(1996-0

4)

Pakis

tan

(1999-0

5)

Sri L

anka

(1991-0

2)

% v

alu

es

Annual grow th of per capita gdp Annual rate of poverty reduction

• Poverty reduction in Bangladesh among the highest in the Poverty reduction in Bangladesh among the highest in the region since 1990sregion since 1990s

• Growth in Bangladesh more pro-poor than in other SA Growth in Bangladesh more pro-poor than in other SA countries except Nepalcountries except Nepal

6

……. But less so with East Asia. But less so with East Asia

Average annual rate (% ) of poverty reduction (in comparison to East Asian Countries)

-10

-8

-6

-4

-2

0

Bangladesh(00-05)

China (90-01)

Korea Rep(90-01)

Malaysia(90-99)

Thailand(90-02)

Vietnam(93-02)

(%)

• East Asian countries have reduced poverty much faster – East Asian countries have reduced poverty much faster – higher growth rates and comparable responsiveness of poverty higher growth rates and comparable responsiveness of poverty to growth to growth

•If Bangladesh attains similar growth rates, it would match the If Bangladesh attains similar growth rates, it would match the pace of poverty reduction in East Asiapace of poverty reduction in East Asia

― In 1990 both Bangladesh and Vietnam had poverty rate of 58%; in In 1990 both Bangladesh and Vietnam had poverty rate of 58%; in 2005 Vietnam’s poverty rate was 20%, half that of Bangladesh’s2005 Vietnam’s poverty rate was 20%, half that of Bangladesh’s

7

Poverty projections and MDGsPoverty projections and MDGs

• IF the 2000-05 GDP growth is maintained (annual average 5.3%), MDG IF the 2000-05 GDP growth is maintained (annual average 5.3%), MDG target (halving poverty rate from 57% in 91-92) will be mettarget (halving poverty rate from 57% in 91-92) will be met

• These projections assume (based on recent history)These projections assume (based on recent history)

– Stable inequality: if inequality were to rise, less poverty reduction will occur Stable inequality: if inequality were to rise, less poverty reduction will occur for same GDP growthfor same GDP growth

– Continued fall in fertility: if household size had not fallen (from 5.2 to 4.9) Continued fall in fertility: if household size had not fallen (from 5.2 to 4.9) between 2000 and 2005, poverty reduction would have been cut by halfbetween 2000 and 2005, poverty reduction would have been cut by half

• Whether the projections are met also depends onWhether the projections are met also depends on

– Frequency of shocks (e.g. food prices, natural disasters) can reduce GDP Frequency of shocks (e.g. food prices, natural disasters) can reduce GDP growth and responsiveness of poverty to growthgrowth and responsiveness of poverty to growth

• Had there been no rice price shock, there would be around 4.2 million fewer poor Had there been no rice price shock, there would be around 4.2 million fewer poor people in Bangladesh in 2008people in Bangladesh in 2008

• Estimated poverty reduction during 2005-2008 would have been 5 pct points; Estimated poverty reduction during 2005-2008 would have been 5 pct points; instead ~2 percentage points with the rice price shock (i.e. from 40 to 38%)instead ~2 percentage points with the rice price shock (i.e. from 40 to 38%)

• Rice price shock is also estimated to have raised poverty gap (average deficit of Rice price shock is also estimated to have raised poverty gap (average deficit of the poor’s consumption relative to the poverty line) by 30%the poor’s consumption relative to the poverty line) by 30%

– How deep and long the current global recession will be (impact on How deep and long the current global recession will be (impact on remittances and RMG exports)remittances and RMG exports)

8

Rise in non-income indicators of welfareRise in non-income indicators of welfare

• Many non-income indicators improved more significantly for Many non-income indicators improved more significantly for the extreme poor than for the overall populationthe extreme poor than for the overall population

• Consistent with inequality in consumption not worseningConsistent with inequality in consumption not worsening

% increase between 2000 and 2005

0

20

40

60

80

100

120

Livestockownership

Cement/CIsheet wall

Cement/CIsheet roof

Safe latrineuse

Electricityconnection

All households Bottom 30%

9

What explains poverty reduction during What explains poverty reduction during 2000-2005?2000-2005?

Significant social and economic transformationSignificant social and economic transformation• Economic transformation – closely related to strong Economic transformation – closely related to strong

GDP growth (>5% annually) and urbanizationGDP growth (>5% annually) and urbanization– rising returns to human and physical assets, especially wages rising returns to human and physical assets, especially wages – shift from low return agricultural labor to nonfarm shift from low return agricultural labor to nonfarm

employment (mainly services) in urban areas employment (mainly services) in urban areas – growth in remittances and exportsgrowth in remittances and exports

• Forces emerging from social transformations over Forces emerging from social transformations over timetime – A fall in the number of dependents in a household, linked to A fall in the number of dependents in a household, linked to

past reductions in fertility past reductions in fertility – Increases in labor force participation and educational Increases in labor force participation and educational

attainment, particularly among womenattainment, particularly among women

10

Economic transformation: labor marketsEconomic transformation: labor markets• Poverty reduction attributed to rising labor productivity and wages, and (to a Poverty reduction attributed to rising labor productivity and wages, and (to a

lesser extent) to shift from agriculture to non-farm employmentlesser extent) to shift from agriculture to non-farm employment– Increase in labor productivity in industry contributed most significantly to income growthIncrease in labor productivity in industry contributed most significantly to income growth

– Share of agriculture in employment fell from 51% to 46%, that of services grew from 27% Share of agriculture in employment fell from 51% to 46%, that of services grew from 27% to 31%to 31%

– Overall job creation during 2000-2005 kept pace with population growthOverall job creation during 2000-2005 kept pace with population growth

• Poverty reduction by sectorPoverty reduction by sector– Highest within Highest within servicesservices due to employment growth (5.4% annually, compared to 0.7% in due to employment growth (5.4% annually, compared to 0.7% in

agriculture and 3.9% in industry)agriculture and 3.9% in industry)

– Substantial in Substantial in agricultureagriculture due to small productivity growth and the large share of due to small productivity growth and the large share of population employed in agriculturepopulation employed in agriculture

– Within Within industryindustry driven primarily by productivity growth driven primarily by productivity growth

Decomposition of Changes in GDP per Capita into Components Productivity by Sector Poverty Changes by Sector

Contribution to changes in GDP per capita

-20% 0% 20% 40% 60% 80%

Employment(rate)

Productivity

Share ofw orking agepopulation

Contribution to growth in GDP per worker, by sector

0% 10% 20% 30% 40%

Intresectoralf low s

Services

Industry

Agriculture

Change in poverty associated with

by broad sector

-4%

-3%

-2%

-1%

0%

1%

Agriculture Industry Services

poverty changes w ithin sectorinflow /outf low to/from sector

Source: HIES 2000, 2005

11

Demographic transition creates opportunities and Demographic transition creates opportunities and challenges in the labor marketchallenges in the labor market

• Although population growth is now Although population growth is now 1.5% per year, the working age 1.5% per year, the working age population is growing at 2.5-2.8 %population is growing at 2.5-2.8 %

2005

-10 -8 -6 -4 -2 0 2 4 6 8 10

0-45-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-8485-8990-9495-99

milion

Women

Men

Population (LHS) andits growth (RHS)

0

50

100

150

200

250

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

millio

n

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

% p

er

yeartotal

w orking agetotalw orking age

• Large cohorts will enter the labor market; ~22 mn. new Large cohorts will enter the labor market; ~22 mn. new entrants will need to be absorbed into the labor market entrants will need to be absorbed into the labor market between 2005 and 2015between 2005 and 2015

• Annual rate of job creation has to double in the years up to Annual rate of job creation has to double in the years up to 2015, compared to the rate during 2000-20052015, compared to the rate during 2000-2005

12

Rising contribution of women in the labor marketRising contribution of women in the labor market

• Women’s labor force participation rates, working Women’s labor force participation rates, working hours, education, income have increased more hours, education, income have increased more than those of men between 2000 and 2005than those of men between 2000 and 2005

• Women finding jobs increasingly inWomen finding jobs increasingly in– Urban areas, public sectorUrban areas, public sector

– Self-employment outside agriculture and using formal Self-employment outside agriculture and using formal financing (micro-credit)financing (micro-credit)

• Women’s labor income is important for poverty Women’s labor income is important for poverty reduction but its full potential remains unexploitedreduction but its full potential remains unexploited– women’s labor market participation still too small to make women’s labor market participation still too small to make

a significant dent in povertya significant dent in poverty

– growth in women’s participation and incomes largely growth in women’s participation and incomes largely concentrated among the nonpoorconcentrated among the nonpoor

13

Remittances and povertyRemittances and poverty

• International remittances grew at 20% annually during International remittances grew at 20% annually during 2000-05; Bangladesh among the top 10 remittance 2000-05; Bangladesh among the top 10 remittance receiving countriesreceiving countries

• Poverty rate among households receiving remittances from Poverty rate among households receiving remittances from abroad is 17% compared to 42% among the restabroad is 17% compared to 42% among the rest

• Areas with higher incidence of remittances less likely to be Areas with higher incidence of remittances less likely to be poor; 24% of households in Chittagong division and 16% in poor; 24% of households in Chittagong division and 16% in Sylhet received remittances, compared to <5% in the restSylhet received remittances, compared to <5% in the rest

• CGE simulations attribute a little above 15% of the poverty CGE simulations attribute a little above 15% of the poverty reduction to the effect of growth of foreign remittancesreduction to the effect of growth of foreign remittances

• However, likely global recession poses clear risks to However, likely global recession poses clear risks to remittance inflowremittance inflow– 63% of remittances come from the Gulf where construction 63% of remittances come from the Gulf where construction

industry is likely to take a downturnindustry is likely to take a downturn

14

Emerging regional divide in povertyEmerging regional divide in poverty

• Rising inequality between the East and WestRising inequality between the East and West– Dhaka and Chittagong contributed 79% of national poverty Dhaka and Chittagong contributed 79% of national poverty

reduction with just over half the population; Khulna and reduction with just over half the population; Khulna and Barisal with 20% of total population had no contributionBarisal with 20% of total population had no contribution

– Till 2000, the largest difference was between Dhaka and the Till 2000, the largest difference was between Dhaka and the rest of the country; from 2000 to 2005, divergence between rest of the country; from 2000 to 2005, divergence between East and WestEast and West

• East-West gap in poverty rate doubled from 2000 to East-West gap in poverty rate doubled from 2000 to 20052005

57 5347 46 45 42

51 52

32 34

46

34

0

10

20

30

40

50

60

Rajs

hahi

Barisal

Dhaka

Chitt

agong

Khuln

a

Syllh

et

Head

co

un

t ra

te (

%)

2000 2005

15

Growth poles and the East-West economic divideGrowth poles and the East-West economic divide

• Regions differentiated by access Regions differentiated by access to growth polesto growth poles– Dhaka and Chittagong: growth Dhaka and Chittagong: growth

poles (shares in population, poles (shares in population, economic activities)economic activities)

– Padma and Jamuna rivers Padma and Jamuna rivers obstacles to access to the growth obstacles to access to the growth polespoles

• East-West gap widened from East-West gap widened from 2000 to 20052000 to 2005– Average consumption in East 9% Average consumption in East 9%

higher in 2000, 17% higher in higher in 2000, 17% higher in 20052005

– Much faster consumption growth Much faster consumption growth for Eastern for Eastern poor poor than Western than Western poorpoor

– Gaps in both endowments and Gaps in both endowments and returns contributed to the returns contributed to the widening East-West consumption widening East-West consumption gapgap

– Gap in endowment widened for Gap in endowment widened for all; gap in returns widened for the all; gap in returns widened for the poorpoor

EasEastt

WestWest

16

Labor markets – East and West Labor markets – East and West • Real wages growing robustly in the East but Real wages growing robustly in the East but

stagnating in the Weststagnating in the West – Total labor income growth in the East was twice that of the Total labor income growth in the East was twice that of the

WestWest– Slow growth of wages in the West mostly explained by Slow growth of wages in the West mostly explained by

stagnation in the urban areasstagnation in the urban areas

• Labor markets and the types of jobs they offer are Labor markets and the types of jobs they offer are also different between regionsalso different between regions

– In the East, salaried jobs dominate; in the West, farming In the East, salaried jobs dominate; in the West, farming remains important, with high share of low-paid daily waged remains important, with high share of low-paid daily waged workersworkers

– 43% of labor income in the West from agriculture, compared 43% of labor income in the West from agriculture, compared to 25% in the Eastto 25% in the East

• Higher returns to education in the East than West; Higher returns to education in the East than West; difference especially large for urban areasdifference especially large for urban areas

• Gender difference and public sector premium are Gender difference and public sector premium are lower in East, likely pointing to better labor market lower in East, likely pointing to better labor market integrationintegration

17

Economic concentration increasing over timeEconomic concentration increasing over time

• Clustering of formal sector employment around Dhaka and Clustering of formal sector employment around Dhaka and ChittagongChittagong

• Large Large increaseincrease in formal sector employment in East from 2003 to in formal sector employment in East from 2003 to 20062006– In areas to the north and west of Dhaka City Corporation, but not the city In areas to the north and west of Dhaka City Corporation, but not the city

centercenter

• Rapid economic expansion to the north and west of Dhaka city Rapid economic expansion to the north and west of Dhaka city (Gazipur, Savar)(Gazipur, Savar) – cheaper land and labor, less congestion, while allowing firms to exploit cheaper land and labor, less congestion, while allowing firms to exploit

the spillovers and positive externalities from Dhaka citythe spillovers and positive externalities from Dhaka city

Changes in employment in firms with TPE>10 (2003-2006)

Changes in employment in Dhaka city and surrounding areas (2003-2006)

Note: Employment in firms with TPE of 10+; green indicates positive change, with darker green indicating higher values; red indicates negative change, with darker red indicating higher absolute values.

18

Why has the East-West economic gap expanded?Why has the East-West economic gap expanded?

• Empirical evidence suggests the following storyEmpirical evidence suggests the following story– Increasing agglomeration of high-return economic activities at Increasing agglomeration of high-return economic activities at

growth poles have led to strong spillover effects in surrounding growth poles have led to strong spillover effects in surrounding areas and higher incomes areas and higher incomes within within EastEast

– East-West differences have expanded because West is East-West differences have expanded because West is handicapped by the absence of growth poles, poor connectivity handicapped by the absence of growth poles, poor connectivity with urban centers, and deficient public infrastructure and with urban centers, and deficient public infrastructure and marketsmarkets

– While the better-endowed households from West can respond While the better-endowed households from West can respond to the economic opportunities in East by to the economic opportunities in East by migratingmigrating, the poor , the poor are mostly unable to overcome barriers to their mobilityare mostly unable to overcome barriers to their mobility

• Poverty incidence also varies widely wPoverty incidence also varies widely withinithin East or East or WestWest– Agro-climatic factors affecting specific areas; e.g. “Chars”, Agro-climatic factors affecting specific areas; e.g. “Chars”,

Chittagong Hill Tracts, salinity of land in southChittagong Hill Tracts, salinity of land in south

– Vulnerability to natural disasters/seasonal shocks: areas with Vulnerability to natural disasters/seasonal shocks: areas with higher risk of cyclone or monga more likely to be poorhigher risk of cyclone or monga more likely to be poor

19

Human development: current challengesHuman development: current challengesMalnutrition continues to be strikingly highMalnutrition continues to be strikingly high

• High malnutrition High malnutrition compared to countries compared to countries of same income levelof same income level

• Between 1996-97 and Between 1996-97 and 2006, nutritional gains 2006, nutritional gains plateauing in terms of plateauing in terms of % of underweight % of underweight childrenchildren

• Fortification of basic Fortification of basic staples in nutritional staples in nutritional program may be key to program may be key to further nutritional further nutritional gainsgains

Trends in Nutritional Status of Children Under Five 1996 to 2007

55

18

56

45

10

43

13

48

36

16

4648

0

10

20

30

40

50

60

Stunting(height for

age)

Wasting(weight for

height)

Underweight(weight for

age)

Source: Based on Preliminary Bangladesh DHS 2007 report

Per

cen

tag

e o

f C

hild

ren

Un

der

5

1996-97 1999-2000 2004 2007

20

Inequities persist in health service utilizationInequities persist in health service utilization

• Several indicators show Several indicators show increasing equity divide in increasing equity divide in health service utilization health service utilization despite gains overall, e.g.:despite gains overall, e.g.: – ImmunizationImmunization– Ante-natal care from a medical Ante-natal care from a medical

trained providertrained provider– Deliveries at both public and Deliveries at both public and

private facilitiesprivate facilities

• Access to care hindered by Access to care hindered by challenges in human resources, challenges in human resources, despite extensive network of despite extensive network of facilitiesfacilities– Absenteeism of staffAbsenteeism of staff– Ratio of nursing staff to doctors Ratio of nursing staff to doctors

remains lowremains low

Assisted delivery by medically trained person, by wealth quintile

0

10

2030

40

50

1996/97 1999/00 2004

Source: DHS data (different years)

Per

cent

age

Poorest Richest

Immunization, by wealth quintile

0

20

40

60

80

100

1996/97 1999/00 2004

Source: DHS data (different years)

Per

cent

age

Poorest Richest

21

Mixed progress in education since 2000Mixed progress in education since 2000

• Little change in primary gross enrollment since 90 Little change in primary gross enrollment since 90 % enrollment rate attained in 2000% enrollment rate attained in 2000– But pattern of late entry into school: over 30% of children But pattern of late entry into school: over 30% of children

of primary school going age not attending primaryof primary school going age not attending primary

• Substantial growth in secondary enrollment (52% Substantial growth in secondary enrollment (52% to 62% from 2000 to 2005). to 62% from 2000 to 2005). – However, completion rates declining with rising rich-poor However, completion rates declining with rising rich-poor

gap: only 6-7% of the poor have completed secondary gap: only 6-7% of the poor have completed secondary schoolingschooling

• Public education expenditure per student Public education expenditure per student significantly lower than other countries in SAsiasignificantly lower than other countries in SAsia– Appears to be compensated by high private tuition Appears to be compensated by high private tuition

expenditures which worsen inequalitiesexpenditures which worsen inequalities– Room to make expenditures more pro-poor (e.g. primary Room to make expenditures more pro-poor (e.g. primary

stipend program benefits large share of non-poor)stipend program benefits large share of non-poor)

22

Regional patterns in human development• Human dev outcomes in poorer divisions are often betterHuman dev outcomes in poorer divisions are often better

– E.g. child mortality is lowest in Barisal and secondary enrollment is E.g. child mortality is lowest in Barisal and secondary enrollment is highest in Khulna; Sylhet is lagging behind in most HD indicators highest in Khulna; Sylhet is lagging behind in most HD indicators (e.g. girls secondary enrolment, infant mortality rate)(e.g. girls secondary enrolment, infant mortality rate)

• The contradiction between economic and social outcomes – The contradiction between economic and social outcomes – do differences in social norms/conservatism play a role?do differences in social norms/conservatism play a role?

Source: Al Samarrai

Gross primary enrolment by division (2005) Gross secondary enrolment by division(2005)

0

20

40

60

80

100

Ba

risa

l

Ch

itta

go

ng

Dh

aka

Kh

uln

a

Ra

jsh

ah

i

Syl

he

tGro

ss

pri

m e

nro

llmen

t (%

)

Male Female

0

20

40

60

80

100

Barisal

Chitt

agong

Dhaka

Khuln

a

Rajs

hahi

Sylh

et

Gro

ss s

ec e

nro

llm

en

t (%

)

Male Female

23

How do households cope with shocks?How do households cope with shocks?

• Rapid national survey of 2,000 households Rapid national survey of 2,000 households to assess the impact of rice price shock to assess the impact of rice price shock (July, 2008)(July, 2008)

• The way households cope may have longer-The way households cope may have longer-term adverse consequences for productive term adverse consequences for productive assets and human capitalassets and human capital– 76% of households reduced quantity of food 76% of households reduced quantity of food

intake; 88% switched to lower quality foodintake; 88% switched to lower quality food– 8% took children out of school; 39% reduced 8% took children out of school; 39% reduced

education expenseseducation expenses– 45% drew upon savings or pawned belongings45% drew upon savings or pawned belongings

24

Therefore the need for effective safety netsTherefore the need for effective safety nets

• Government has raised safety net Government has raised safety net expenditures steadily since mid-1990sexpenditures steadily since mid-1990s

• But public resource allocation across But public resource allocation across divisions is puzzling divisions is puzzling – Not consistent with poverty incidence; e.g. 22% Not consistent with poverty incidence; e.g. 22%

of households in Sylhet safety net beneficiaries of households in Sylhet safety net beneficiaries while national average is 13%while national average is 13%

• Low coverage and transfer valuesLow coverage and transfer values– Even among bottom 10%, less than one-fourth Even among bottom 10%, less than one-fourth

receive any safety net benefitreceive any safety net benefit

• Little coverage of urban poor except for Little coverage of urban poor except for OMSOMS

25

Looking ahead: accelerating the pace of Looking ahead: accelerating the pace of poverty reductionpoverty reduction

(A) (A) Raising growth beyond 7%Raising growth beyond 7%– Stable macro and political environment, removing infrastructure Stable macro and political environment, removing infrastructure

bottlenecks, export diversification, greater female participation in bottlenecks, export diversification, greater female participation in labor force and sustaining remittance growthlabor force and sustaining remittance growth

– Investments to raise agricultural productivity (closing the “Investments to raise agricultural productivity (closing the “yield yield gapgap” with other developing countries) –will reduce regional ” with other developing countries) –will reduce regional disparity since lagging areas rely disproportionately on disparity since lagging areas rely disproportionately on agricultureagriculture

(B) Spreading growth to lagging regions(B) Spreading growth to lagging regions– Investment in physical infrastructure (roads, Padma bridge) to Investment in physical infrastructure (roads, Padma bridge) to

improve access to markets and existing growth polesimprove access to markets and existing growth poles– Investment in urban infrastructure and services in lagging regionsInvestment in urban infrastructure and services in lagging regions– Investment in human capital/skills – conditional transfer programs Investment in human capital/skills – conditional transfer programs

can serve dual (safety net and human devlopment) objectivescan serve dual (safety net and human devlopment) objectives– Improving access to remittances by reducing barriers to migrationImproving access to remittances by reducing barriers to migration– Spatially targeted incentives and complementary investments to Spatially targeted incentives and complementary investments to

spur the creation of regional growth polesspur the creation of regional growth poles

26

Looking ahead (cont.)Looking ahead (cont.)

(C) (C) Moderating population growth rates, tackling malnutrition Moderating population growth rates, tackling malnutrition and infant and maternal mortalityand infant and maternal mortality- Measures to increase use of contraceptives, scaling up Measures to increase use of contraceptives, scaling up

demand side interventions (e.g. maternal care voucher demand side interventions (e.g. maternal care voucher pilot) and provision of fortified foodpilot) and provision of fortified food

(D) Reducing inequities in education and strengthening (D) Reducing inequities in education and strengthening qualityquality- Raising public education spending in line with regional Raising public education spending in line with regional

benchmarks and focus on access by poor, preventing drop-benchmarks and focus on access by poor, preventing drop-outs and strengthening links with labor marketouts and strengthening links with labor market

(E) Expanded role for safety nets(E) Expanded role for safety nets- Current fiscal allocation for safety nets can be used to Current fiscal allocation for safety nets can be used to

expand benefits to most needy by improving targeting and expand benefits to most needy by improving targeting and consolidating programs under an umbrella bodyconsolidating programs under an umbrella body

- Regional allocation of safety net resources need to be Regional allocation of safety net resources need to be aligned better with poverty incidencealigned better with poverty incidence