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Sub-National Growth Dynamics: Insights from Macro-GDP and Micro-Survey Data Binayak Sen December 12, 2005. Motivation for the Paper. Some Stylized Facts Acceleration of Growth in the 1990s (and beyond) compared to 1980s Pronounced rise in inequality - PowerPoint PPT Presentation
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Sub-National Growth Dynamics: Insights from Macro-GDP and Micro-Survey Data
Binayak Sen
December 12, 2005
Motivation for the PaperSome Stylized FactsAcceleration of Growth in the 1990s (and beyond) compared to 1980sPronounced rise in inequalityConsiderable progress in poverty, human development and social indicatorsWeak sign of social convergence
Motivation for the Paper (2)What is the sub-national story underlying the growth dynamics?How different are regional growth rates?Has spatial inequality become sharper?Any sign for regional growth convergence?What lessons from sub-national data for future national growth?Is there a role for regional policy?
What is sub-national level?Spatial differences across division (6), region (20 old districts), new district (64)
Data Source: macro-GDP by region; micro-expenditure by region and district; census information on district
Considerable Regional DifferencesConsiderable regional concentration in income/ expenditureDhaka/ CTG Division55-60% of total GDP and Survey ExpenditureDhaka/ CTG Region30% of total GDP and Survey ExpenditureConsiderable regional variation in growth
Regional Growth Differences
Table 3: Per Capita GDP Growth Performance by Region during 1980s and 1990s
District
Annual Per Capita GDP Growth
(1982-92)
Annual Per Capita GDP Growth
(1992-99)
Dhaka
1.68
3.68
Mymensingh
1.31
2.71
Jamalpur
.83
1.13
Tangail
.38
2.65
Faridpur
3.32
2.29
Chittagong
2.35
3.23
Ctg. Hill Tract
-2.00
4.07
Noakhali
1.82
2.88
Comilla
2.69
3.01
Sylhet
1.02
2.53
Rajshahi
2.54
1.61
Dinajpur
2.17
2.05
Rangpur
2.31
1.94
Bogra
2.31
2.21
Pabna
1.10
2.38
Khulna
1.64
2.84
Barisal
2.25
2.23
Patuakhali
2.33
3.67
Jessore
3.89
2.58
Kushtia
3.76
2.57
Regional Growth Differences (2)
Table 2: Rank Comparison between Growth in Per Capita GDP and Consumption Expenditure during the 1990s
Region
Growth in Per Capita GDP Macrodata
Rank
Growth in Per Capita Consumption Expenditure Microdata
Rank
Dhaka
3.68
1
3.11
4
Mymensingh
2.71
6
1.09
13
Jamalpur
1.13
18
1.65
10
Tangail
2.65
7
3.45
1
Faridpur
2.29
12
2.13
5
Chittagong
3.23
2
0.98
14
Noakhali
2.88
4
1.87
8
Comilla
3.01
3
3.29
2
Sylhet
2.53
10
-0.12
15
Rajshahi
1.61
17
1.58
11
Dinajpur
2.05
15
-1.58
17
Rangpur
1.94
16
-1.03
16
Bogra
2.21
14
3.45
1
Pabna
2.38
11
2.04
6
Khulna
2.84
5
1.83
9
Barisal
2.23
13
3.15
3
Jessore
2.58
8
1.13
12
Kushtia
2.57
9
1.94
7
Regional Growth Differences (3)
Table 5: District Variation in Per Capita Expenditure Growth, 1991/92-2000
Annual Growth Rates
Frequency
Percent
Negative growth
13
21.3
Less than 1%
12
19.7
Less than 2%
11
18.0
Less than 3%
10
16.4
3% and More
15
24.6
Total
61
100.0
Negative Growth
Less than 1%
Less than 2%
Less than 3%
3% and More
Nilphamari
Munshiganj
Rajshahi
Brahmanbaria
Narsingdi
Thakurgaon
Sylhet
Cox's Bazar
Lalmonirhat
Barishal
Panchagarh
Madaripur
Magura
Sirajganj
Jhalokati
Kushtia
Maulvibazar
Gopalganj
Dhaka
Bagerhat
Mymensingh
Shariatpur
Pirojpur
Barguna
Tangail
Habiganj
Sunamganj
Pabna
Natore
Rajbari
Joypurhat
Jessore
Noakhali
Feni
Faridpur
Manikganj
Gaibandha
Jamalpur
Jhenaidah
Comilla
Chuadanga
Naogaon
Lakshmipur
Nawabganj
Narayanganj
Meherpur
Kurigram
Kishoreganj
Chandpur
Bogra
Narail
Khulna
Satkhira
Netrokona
Rangpur
Chittagong
Bhola
Dinajpur
Sherpur
Gazipur
Patuakhali
What Explains the Regional Growth Variation?Possible Key Factors
Human Capital: +veInitial Income (Expenditure) Inequality: -veUrbanization: +veAgricultural Technology: +veGender Inequality: -veLarge Landholding: + or -?
Human Capital and Growth
Human Capital and Growth (2)
Human Capital and Growth (3)
Gender Inequality and Growth
Gender Inequality and Growth (2)
Initial Expenditure Inequality and Growth
Large Landholding and Growth
What Explains the Regional Growth Variation? (2)Results of multivariate analysis confirmed the predictionsRegional growth convergence (both conditional and unconditional)yesHowever, (a) the speed of convergence is very slow, (b) the trend can change if inequality is not addressed
Results of Multivariate Analysis
Table 10: Determinants of Regional Growth: 64-Districts Data
Independent Variables
Regression Coefficient
Regression Coefficient
Regression Coefficient
Regression Coefficient
Regression Coefficient
Regression Coefficient
Regression Coefficient
Constant
.374
(3.40)*
.472
(4.42)*
.632
(5.53)*
.630
(5.65)*
.649
(5.90)*
.738
(6.69)*
.737
(6.64)*
Natural log of initial level of district expenditure, 1991
-.044
(-3.27)*
-.061
(-4.48)*
-.080
(-5.57)*
-.078
(-5.57)*
-.082
(-5.98)*
-.096
(-6.78)*
-.095
(-6.68)*
Adult Literacy Rate, 1991: Both sexes
.108
(3.23)*
.075
(2.25)**
.070
(2.13)**
.081
(2.14)**
.102
(2.74)*
.099
(2.68)*
Urban Population Share, 1991
.069
(2.92)*
.081
(3.42)*
.069
(2.71)*
.072
(2.95)*
.067
(2.69)*
Initial Expenditure Inequality, 1991
-.130
(-2.03)**
-.129
(-1.93)***
-.125
(-1.95)***
-.130
(-2.00)***
% Area under Large Farm, 1984
.150
(0.831)
.237
(1.33)
.282
(1.49)
Share of Irrigated Land, 1984
.088
(1.86)***
.098
(2.14)**
.113
(2.40)**
Interaction between Irrigated Land and Share of Large Farm-holdings, 1984
-1.231
(-1.88)***
-1.423
(-2.23)**
-1.568-(2.41)**
Change in Infant Mortality Rate over 1991-00
.029
(2.13)**
.031
(2.28)**
Male Advantage in Attendance Rate 5-24, 1991
-.019
(-1.59)
Adjusted R Square
0.139
0.257
0.343
0.377
0.410
0.470
0.481
Note: Dependent Variable: annual Per capita District Consumption Expenditure Growth over 1991/92-2000. Figures in parentheses represent T-ratios.
* Significant at 1% level ** Significant at 5% level *** Significant at 10% level
What Matters Most: Within-Region or Between-Region Inequality?Total inequality (i.e. inequality in inter-personal income) is mainly explained by within-region inequalitySharp rise in within-region inequality; slight increase in between-region inequalityConsistency with regional growth convergence
Table 9: Between and Within-Group Decomposition of Theil Index of Inequality at District-Level, 1991/92-2000
Level of Decomposition: 64-District
1991/92
2000
Number of Sub-Groups
61
63
Within-Group Inequality
0.1084 (84.6%)
0.1562 (82.8%)
Between-Group Inequality
0.0197 (15.4%)
0.0325 (17.2%)
Total Inequality
0.1281 (100%)
0.1887 (100%)
Note: Figures in parentheses represent percentage contribution of each component of inequality to total inequality.
New Growth AgendaHuman capital requirements vary with stages of development: Confronting new challenges
Rethinking new technology in the phase of agricultural diversification
New Growth Agenda (2)Urban Futures: Putting urban on the growth agenda:
Tapping mega-city potentialsChanging fortunes of district townsUnderstanding dynamics of meso-economy
New Growth Agenda (3)Initial income inequality depresses growthAddressing new sources of income inequality:
Land vs. non-land sources
New Growth Agenda (4)Inclusion of missing factors for future analysis:
InfrastructureAccess to financeRegional governance
Need for periodic regional data