PRC's Poverty Reduction Success: Implications for Bangladesh (Presentation)

8/4/2019 PRC's Poverty Reduction Success: Implications for Bangladesh (Presentation)

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The Implications of the Inclusive Growth and

Development Aid Agenda of the Peoples Republic

of China for Poorer Countries in Asia:The Case of Bangladesh

Paper Presented at the Regional Workshop onSOCIAL INCLUSIVENESSIN ASIAS EMERGING MIDDLE INCOME COUNTRIES

Mustafa K. Mujeri

Zulfiqar AliSiban Shahana

13 September 2011

Jakarta


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Focus of the paper

1. SOCIO-ECONOMIC SIMILARITIES AND DIFFERENCES IN PRC ANDBANGLADESH

2. POVERTY REDUCTION IN PRC AND BANGLADESH:UNDERSTANDING DIFFERENTIAL PERFORMANCE

3. PRCS ECONOMIC COOPERATION AND DEVELOPMENT ASSISTANCETO BANGLADESH: IMPLICATIONS FOR POVERTY REDUCTION INBANGLADESH

4. LESSONS FOR BANGLADESG FROM PRCS POVERTY REDUCTIONSUCCESS


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Socio-economic Differences

Indicators Bangladesh PRC

1980 2000 1980 2000

Annual population growth (%) 2.68 1.82 1.25 0.79

Population density (per sq. km.) 694 1081 105 135

Urban population (%) 15 24 20 36

Annual GDP growth rate (%) 4.8 5.9 7.8 8.4

GDP per capita, constant 2000 $ 226 335 186 949

Agri. value added, % of GDP 32 26 30 15

Gross investment, % of GDP 14 23 35 35Life expectancy at birth, years 48 61 66 71


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Socio-economic Similarities

Despite the above differences, both Bangladesh and PRC facerather similar economic problems in certain respects, such as:

Sustainability of growth and

Emerging inequalities

Economic growth in both countries have been associated with:

- sharp increases in spatial and vertical inequalities

- greater fragility in incomes among the poor and the

marginalized groups

- adverse shifts in several climate change indicators

However, while the policy response in PRC has been to reduce

inequality through changes in tax rates, greater public investment

in western and interior regions and improving social security

benefits, inequality-reducing policies in Bangladesh are yet to

receive high priority within the policy agenda.


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Poverty Reduction in PRC and Bangladesh:

Understanding Differential Performances

The incidence of poverty has also declined inBangladesh over the past several years;

As the estimates indicate, income poverty has

declined from 56.6 percent in 1991-92 to 31.5

percent in 2010;

However, compared with the poverty reduction

achievement of PRC, Bangladeshs performance is

less spectacular.


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Social and Environmental Poverty in PRC and Bangladesh

The progress in human and social development in PRC has also been

remarkable since 1978; The level of peoples education and health condition has significantly

improved since reform, which has contributed to better human capitalaccumulation in PRC;

Average years of schooling (above 15 years of age) increased to 7 years in2000 from 4.6 years in 1982.;

The share of illiterate population also declined substantially from 22.8percent in 1982 to 6.7 percent in 2002 reflecting a decrease from 231million to 85 million;

Infant mortality decreased from 37.6 percent in 1982 to 28.4 percent in2000;

The average life expectancy increased to 71.4 years in 2000 from 67.8

years in 1981; All relevant indicators demonstrate rapid progress in human and social

development, and the complementary relationship between economicand social progress in PRC.


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Social and Environmental Poverty in PRC and Bangladesh

Bangladeshs performance in reducing social poverty has

been mixed;

Child nutritional status reveals that a high proportion ofchildren in the country currently suffers from malnutrition;

However, Improvement has taken place in the case of

mortality indicators: under-five mortality per thousand livebirths declined from 151 in 1990 to 73 in 2010; Infantmortality rate per thousand live births also declined from 94to 41 during the same period;

Access to safe drinking water is satisfactory at its current state

(97.8 percent);

Access to sanitary toilet is, however, still poor with only 54percent of the total population enjoying such facilities.


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Institutional Set up for Poverty Reduction in PRC and Bangladesh

There were three distinct phases of poverty reduction approaches in PRC:

Improving farmers access to assets (prior to 1978): poverty reduction inthis phase was mainly realized by:

- Increasing farmers access to land, physical assets, financialservice, technological extension services, and establishing acommunity-based social security system

Achievement of overall economic growth and improvement in the termsof trade of agriculture (between 1978 and 1984): This phase included:

- Continuous high economic growth, transfers of rural labor force tonon-agricultural enterprises, speeding up urbanization,

implementing export oriented open-up policies, and improvement of

human capital

Targeted programs combined with a trickle-down development strategy(after 1985): In this phase, regionally targeted programs; macroeconomicadjustment to permit and promote the participation of the poor; andtargeted poverty reduction plan were implemented to lift the remaining

rural poor out of poverty.


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Bangladesh, on the other hand, has a long history of implementation of

anti-poverty programs. The Rural Public Works Program (RPWP) has beenan important policy instrument for the government since the early 1960sto augment employment and income of the rural poor especially duringthe lean agricultural seasons.

The government is currently implementing as many as 87 differentprograms (including social safety nets) through different

ministries/departments in order to support the disadvantaged peopleincluding women, children, elderly, and the disabled.

These programs include: cash transfer programs; food security programs;micro credit for self-employment; and funds for poverty alleviation.

In order to support these programs, an allocation of nearly Tk. 226 billion

was made in the financial year 2011-12, accounting for about 14 percentof the national budget and 2.5 percent of the countrys GDP.

Some of the important cash transfer programs include: 100-dayemployment generation scheme, old age allowance, widow allowance,disability allowance, and others Major food assistance programs include:Food for Work, VGD, Vulnerable Group Feeding (VGF), and others.


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Various studies point out that the existing social safety net

programs (SSNs) in Bangladesh provide limited coverage whichcannot cope with the magnitude of extreme poverty andmarginality that exists in the country.

The SSNs cover about 15 million people, and consequently falldrastically short in coverage for about 24 million people who belongto the extremely poor category.

Furthermore, the SSNs cover mostly the rural poor, whereas thenumber of urban extreme poor is also large and the nature of urbanpoverty is more severe than rural poverty in certain respects.

Also, there is no integrated national policy for social protection andsafety net programs in Bangladesh.

Therefore, the extent, nature and mechanisms of most of the safetynet programs undergo changes in an ad hoc manner especially withthe change of the government.

There is also a lack of integration and coordination among varioussafety net programs and the providers.


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PRCS Economic Cooperation and Development

Assistance to Bangladesh Chinese assistance to Bangladesh resulted in setting up of power

plants, fertilizer factories, six friendship bridges, construction ofmodern convention center, modernization of marine fisheries, etc.

Provided US$ 6 million for capacity building of Bangladeshi civilservants

Providing training on criminal investigation techniques and forensic

tests Agreed on providing support for peaceful use of nuclear energy in

the fields of medicine, agriculture, and biotechnology

Preferential access to 84 items into China

Cooperation in solving water problems and in management ofdifferent rivers

Technological assistance to Disaster and Flood Warning Center

Defense cooperation as well


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PRCS Economic Cooperation and Development

Assistance to Bangladesh

Bangladesh is the third largest trade partner of PRC in South Asia(Bilateral trade US$$ 3.19 billion in 2006)

During 2010 summit, the framework ofCloser Comprehensive

Partnership of Cooperation (2010) was signed which includes:

- Agreement on Economic and Technical Cooperation- Framework Agreement on Providing Preferential Loan

- Protocol on Remitting the Bangladesh Interest-free Loan due

in 2008

- Exchange of Letters on the construction of the seventh

Bangladesh-China Friendship Bridge


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Trends in PRCs Assistance to Bangladesh

0

5

10

15

20

25

30

35

Trends in Total Disbursement(m US$)

Year Total


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Lessons from PRCS Poverty Reduction Success:

Implications for Bangladesh

PRCs poverty reduction has been a process of constant learning

and experimentation

PRCs Key Factors of Success

Stable political environment and rapid economic growth

Growth of agricultural GDP Development of non-state economic sector

Strong Government commitment throughout the implementation of the Plans

Supportive administrative system at all levels


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Lessons from PRCS Poverty Reduction Success:

Implications for Bangladesh

Economic growth is critical Targeting and participation of the poor matter

Success needs supplementing area-based poverty reductionefforts with a household-oriented approach

Basic insurance acts as complement to poverty reduction effort

Setting clear objectives is important Human development deserves special emphasis

Adequate allocation of resources for the local governments iscritical

Effective coordinated approach is the key

Rural-urban segmentation obstructs poverty reduction Realizing the potential of migration needs more explicit

recognition

Adapting to climate change is important for the poor


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PRC's Poverty Reduction Success: Implications for Bangladesh (Presentation)