Thanks to the economic reforms of the 1970s and 1980s, Sri Lanka's GDP grew by 5 percent a year during the 1990s. Yet the poverty rate fell by only 3 percentage points in that 10-year period. Does this mean that growth makes the rich richer and the poor poorer? No. Most of Sri Lanka's growth was concentrated in the Western Province, which grew at 6.2 percent a year, and cut its poverty rate in half. The rest of the country grew at only 2.3 percent a year; poverty in many provinces actually increased. Furthermore, the increase in inequality was the smallest in the Western Province, and the largest in Uva, one of the provinces with sluggish growth and rising poverty. In short, growth in Sri Lanka is pro-poor.
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Mariam Claeson
Thu, 11/15/2007 - 07:48
It was interesting to see that you have considered income, education, infrastructure etc in calculating poverty levels. It was interesting to find that richest people live in only some provinces. What needs to be considered is how to develop the other regions? How to improve infrastructure? How to improve education, health, housing etc? Eventhough this is what should be focused, the bargaining power of the people living in these area are low. They can also be easily misguided.
The policy makers will be interested in reforms only if it helps them to win more votes remain on power (this is especially the case in SL). We need to think of a strategy to provoke policy makers and thereby to get them to think of reional development. Therefore, the focus on regional development needs to be emphasised by getting all stakeholders involved.
Wed, 09/19/2007 - 15:10 I have just been introduced to your blog and I must say, Its about time. I'm extremely impressed by your analyses of many of the situations in the countries that fall under your region, but I'd like to know something. What can you do? What can the world bank's economists or even the world bank itself do for sustainable development in south asia? Considering the response you would get from your lesser educated friends in the Indian beauracracy, especially considering their contempt for foreign help, what can anyone do? I am a NRI, and a first year veterinary student out west. It is my dream that I may come back to south asia to work with our quickly disappearing wildlife. But as I have heard from every corner, though i stubbornly persist, a foreign education even with indian skin and blood brings nothing but contempt to the faces of those who are in a position to make a real difference.
Mon, 09/17/2007 - 17:22 Just thought I'd add a little more to what has already been said. Most of the growth in Western Province, Sri Lanka's "engine of growth" came from expansion in services (including IT, tourism) and manufacturing - sectors in which the share of WP is overwhelming compared to that of the rest of the country. These were also the sectors that are likely to have benefited the most from the reforms of the 70s and 80s. The rest of the country is dependent much more on agriculture, where growth has been poor and (as Shanta mentions) most of the anemic growth that did occur, in a province like Uva, was skewed in favor of the better-off. Agriculture is also the sector where the least amount of "liberalization" has occurred, for example in import tariffs or land policy. None of this proves causation of course - does not prove (beyond reasonable doubt) that the reforms caused faster and more inclusive growth in WP, and the lack of reforms in agriculture had the converse effect elsewhere (such things are notoriously hard to "prove"- lack of data, problems in attribution, and of course the economist's perpetual quagmire, the dreaded "endogeneity", aka the chicken-and-egg problem in technical terms). But the coincidence is somewhat revealing, and throws up a few questions in my mind: (a) does Sri Lanka's experience suggest that regionally "unbalanced" development is sometimes the corollary of "partial/incomplete" reforms/liberalization, or (b) do regional gaps widen mainly because certain parts of the country blessed with better conditions to start with (better infrastructure, access to a port, financial services, etc.) tend to exploit the opportunities from liberalization far better than the rest? (c) does the Sri Lanka experience suggest explanations why policy reforms in certain sectors are hard - that too when it is a lagging sector that by some argument at least, should be less resistant to change simply because status quo is not going very well for most people? The last question is of course a loaded one. But the reason I mention it here is because I think that a small, relatively homogeneous and intellectually open society like Sri Lanka provides an easier context for carefully examining this question - the answers to which can offer important clues for similar questions in the context of other countries as well.
Tue, 09/25/2007 - 05:06
Intellectualizing the issue of poverty is fine but not its trivializing. The usefulness of poverty analysis, the way it is done in the South Asia is limited to know the extend of inequality and deprivation among the people and often the economic analysis fell short of finding an enduring solution to the problem, we have seen the baseline keeps changing, thanks to the mathmatics of poverty. Development economic literature, including the globalization and liberalization perspectives have postulated most of the plausibilities stated by Ambar as well as Shanta, but often failed to provide a workable model to the interested decision makers. Poverty watchers will agree that poverty has geographical, resource, social capital, public policy and political dimensions. The fact that nearly 70% of GDP is generated in about 100Km radius of Colombo is not only due to the fact it has improved infrastructure, higher level of education, proximity to the national ports, developed hospitality business nodes, and proximity to the political powers, but is also due to the structure of investment policy promoted by the country. The question we rarely ask is how come WP obtained these opportunities? How come the national resources, both human and financial capital converge toward the WP, particularly Colombo. While it is important to recognize that due to the smallness of the country, resource mobility is much easier and it is but natural to expect that all moveable assets will converge where is most profitable. It is to some extent is happening in Sri Lanka. The country is also witnessing rapid transfer of assets from the highlands to the plains: tea eastates to plush real estates along the colombo coastlines. The hospitality business centric foreign investment patterns in the country further developed the SW coast and the coastal concentration of the SW provinces provided the much needed resource impetus for this region to grow. It is also true that 'southern' centric approach followed by the past national governments with their culturally and politically biased public policies and resulting investment strategies actually accentuated these processes. As a result development becomes truncated and converge to the WP , which is considered as the citadel of economic safety and national interests. Unless and until the governments take a nationalistic view and get away from the Southern Polity based development approach, growth will be skewed. Is it not true, most of the poverty analyses fall short of capturing adequately these cultural and conflict perspectives? I beleive that if poverty analysis of the whole country and that of the country excluding the conflict prone areas of East and North are done separately the poverty patterns and the causal factors, Amber refers to, will be distinctly different. so much for the poverty analyses. My sibmission is that we have to understand the internal dynamics of a country rather than the Globalization and Liberalization perspectives more resoundly and avoid trivializing the endemic existence of poverty through classical or neo classical theories in which people like Amber seems to have been educated.
Tue, 09/18/2007 - 23:50 I have gone through the posting on blog. I agree that there is visible economic growth. The growth has not been percolated to the poorest & poor lot. The large chunk has been on account of rich and richer. The reason is there no distribution system that ensure weak can take benefit in present capitalist system. The capitalist system has its own advantage, and man only work, only work with the heart, if he is the beneficiery for his work. Its obvious strong nexus and it should be welcome. The poor people only benefits if they participate in the development process. Even the process has still a room to create more value. The system of created value be made by intervention that poors' capacity develops, and added value distributed to poor too.
Mon, 09/24/2007 - 01:21
Dear Shanta,
As you said Sri Lanka have been showing a gowth since 1980's what will be the projected GDP and the Inflation rate according to the past data, without considering the current rates published by the Central Bank of Sri Lanka (CBSL). how different will it be from the reality? because as we know that the Government of SL has been changing its financial policies through out and the poor becomes poorer and the rich richer... its a fact that the income we ern is not sufficent to live (it just covers the basic needs and for some not even that)
Hope to hear a unbiased answer from you, as i just want to see how far can the country go with all these economic policies, which the Gov is putting forward and where we are conpared to the other countries in the SA Region.
Regards,
Nooranie