Income inequality continues to widen
Income inequality in five South Asian nations widened despite an average economic growth of 5.9 percent a year over the last three decades, a study said yesterday.
Weak public institutions have mostly been blamed for the uneven distribution of wealth, said M Syeduzzaman, a member of the board of advisers of Pakistan-based Mahbub ul Haq Human Development Centre that conducted the study.
The study, 'Human development in South Asia 2015: The economy and the people', was unveiled by the Brac Institute of Governance and Development at the Brac Centre Inn in Dhaka.
The countries looked at by the study are: Bangladesh, India, Pakistan, Sri Lanka and Nepal.
The nations achieved 5.9 percent GDP growth on average annually between 1980 and 2010, but they could gain only 1.5 percent growth in social development during the period.
Income inequality that has risen over the last three decades in Bangladesh indicates a low impact of growth for the poorest households, the report said.
In Bangladesh, income inequality measured by the Gini coefficient increased from 0.350 in 1984 to 0.458 in 2010, with a similar trend in both rural and urban areas.
Growing inequity in the distribution of economic output is also evident from an increase in the income of the rich at the expense of the poor, according to the report.
Between 1984 and 2010 in Bangladesh, the share of the poorest 20 percent of population in national income decreased from 2.9 percent to 2 percent, while for the richest 20 percent of population, it grew from 28.3 percent to 37.6 percent.
A hike in food prices tends to aggravate poverty and food insecurity among the poor. In Bangladesh, between January 2005 and March 2008, rice inflation increased the number of poor people by 12.1 million.
Between 2005 and 2010, food prices rose at an alarmingly high annual rate of 14 percent.
However, among the five nations, Bangladesh is ahead on some social indices. For instance, the child mortality rate in Bangladesh is 42 in 1,000 a year, whereas it is 52 in India and 82 in Pakistan.
Similarly, life expectancy in Bangladesh is 71 years, while it is 68 in India and Pakistan, said Selim Jahan, director of the Human Development Report Office of the United Nations Development Programme.
The country is more successful in both basic health and education compared with other South Asian nations, although others have achieved more economic growth over the last three decades, he said.
“Bangladesh's position in those social indices is well ahead compared to other peers because of better policy supports, better resource allocations and the strong roles played by the civil society,” Jahan added.
Bangladesh has come a long way since the 1980s -- from being regarded as an international failure to overtaking both India and Pakistan, the two largest countries in South Asia, in terms of progress in human development indicators.
“And this has happened despite the country's lower per capita income compared to its neighbours.”
What is disconcerting is that Bangladesh spends a small proportion of GDP on education relative to India. However, spending on education as a percentage of total government expenditure is the highest in comparison to India, Pakistan and even Sri Lanka, according to the report.
A plausible explanation for Bangladesh's progress in human development is the country's focus on primary education.
Bangladesh spends almost half of its total education budget on primary education. This leads to higher net enrolment rates, especially for women: Bangladesh is the best performer in South Asia as measured by the Gender Parity Index of net enrolment rate.
Over the last three decades, Bangladesh has performed impressively not only in terms of increasing and sustaining economic growth, but also in ensuring that growth is inclusive and pro-poor, according to the study.
The incidence of poverty, hunger and malnutrition has decreased over the last three decades.
In terms of food security, the focus has been towards food availability, access and proper utilisation, it said.
The South Asian economies have grown at a phenomenal rate. The economic progress was achieved mainly because of structural reforms such as trade liberalisation, financial sector reforms and de-regulation of state control on the economy, the report said.
While the growth has resulted in the creation of sufficient number of employment opportunities, the majority of the workers are employed in low productivity jobs and are working in poor conditions.
There is a need for pro-poor economic growth framework that ensures not only the creation of jobs but also improves the quality of work, it added.
Furthermore, despite the positive developments and the resulting higher economic growth, comparable success in improving the living standards of people in South Asia, in particular the most vulnerable, has not been achieved.
Poor social outcomes have mainly been due to poor macroeconomic frameworks resulting in fiscal and trade deficit and rising debt burden, the study said.
While there have been some positive initiatives for women's empowerment, women continue to face discrimination and deprivation, according to the study.
Regarding Bangladesh, Syeduzzaman said the government should strengthen the public institutions, improve the physical infrastructure and develop human skills.
Jahan said the country should utilise its demographic dividend: it has a huge number of young population who are well capable of doing hard work.
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