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7 August, 2019 10:45:34 AM
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Unequal income gains threaten fight against extreme poverty

But deep poverty will persist if the gains of growth stay concentrated in the relatively well-off parts of the population
Prof. Sarwar Md. Saifullah Khaled
Unequal income gains threaten fight against extreme poverty

Poverty that results from unequal distribution of gains from economic prosperity is a menace that has to be eradicated at the earliest by equitable distribution of gains of economic growth. The World Bank (WB) said extreme poverty has been falling steadily around the world. But eliminating poverty by 2030 could be stymied by unequal distribution of the gains of economic growth. The WB warned that unless the gains of growth are steered better to those at the bottom of a country’s economy, they could be left behind. However, the gains particularly in China, India and Indonesia have led to a dramatic reduction in global poverty.
As per the latest comprehensive data some 767 million people were living below the global poverty threshold of US $1.90 per day. That was 10.7 per cent of the world’s population. The world had almost 1.1 billion fewer poor in 2013 than in 1990, a period in which the world population grew by almost 1.9 billion people.
The biggest concentration remains in sub-Saharan Africa, with 41 per cent of people mired in utter poverty. Many of them rural based with little access to education. In South Asia, the figure is 15.1 per cent; Latina America and the Caribbean, 5.4 per cent; and East Asia and the Pacific, 3.5 per cent.  Bangladesh is yet to mark a significant improvement in reducing income inequalities and hence poverty. The inequality is a key impediment of ending poverty. Economic growth cannot do that alone. The most successful countries in eliminating extreme poverty are those where policies ensure that the bottom 40 per cent of the population enjoys the strongest income gains as economic growth picks up. The larger the growth in incomes of the bottom 40 per cent, the more quickly prosperity is changing life for poor people in a society. The size of income growth among the bottom 40 per cent defines a country’s level of success in boosting shared prosperity.  

But deep poverty will persist if the gains of growth stay concentrated in the relatively well-off parts of the population. While inequality has mounted in developed economies, a number of emerging countries have been able to temper it with efforts to ensure the benefits of growth reach the poorest, said Francisco Ferreira, who oversees the WB’s research programmes on poverty, inequality and agriculture. The report highlights such achievements in Brazil, Cambodia, Mali, Peru, and Tanzania. The recipe for success is generally the same that is, maintaining macro-economic stability and low inflation; ensuring labour markets function well so that growth translates into jobs and jobs into wages; economic diversification; building manufacturing and services industries on top of farming; and having proactive social policies like health care and education.

Francisco Ferreira said that declining inequality is actually possible. It is not a pipe dream. He warned, however, the world will be unable to reach the WB’s target of bringing extreme poverty down below 3.0 per cent of the global population by 2030, even if global economic growth is firm over the next decade, if inequality is not tackled simultaneously.

The target may well be out of reach unless growth becomes more pro-poor and leads to faster gains at the bottom of the distribution following inequality.

In the Indian Subcontinent the WB statistics show, overall, that while in some fields India is doing better than Pakistan, in others Pakistan is ahead. The data shows that compared to 8.3 per cent in Pakistan as many as 21.25 per cent Indians live at or below the WB's poverty line of US $1.90 a day. And 58 per cent Indians make US $3.10 a day, compared to 45 per cent in Pakistan. India fares marginally better than Pakistan in life expectancy that was 66.1 years in Pakistan and 68 years in India in 2014. Life expectancy in Bangladesh now is 72 years on an average. India has an edge in life expectancy for women too, 69.49 years versus 67.15 years for Pakistan. Bangladesh has the potential to overcome extreme poverty by 2030 if it takes firm steps to make economic growth and equitable distribution possible. But until Bangladesh Gross Domestic Product (GDP) growth achieves a faster rate and simultaneous equitable distribution of the gains of economic growth achieved, it is unlikely to reach such target.

To move to the next level and realize Bangladesh’s goals of becoming a middle income country by 2021 and overcoming extreme poverty by 2030, the country needs to sustain its economic growth and equitable distribution of gains of economic growth, create more and better jobs, focus on energy and transportation infrastructure, and make progress on improving the investment climate and the quality of health and education.

Bangladesh needs to continue creating enough jobs opportunities to employ its 2.0 million young people who enter the job market every year. This is to enhance the equitable distribution of the gains of economic growth. It requires boosting productivity and foreign and domestic investment by reforming business regulations and improving infrastructural facilities. This is for creating more job opportunities, reducing infrastructure and energy deficiencies, and enhancing financial efficiency. In addition it is also required in particular to ensure good governance through ensuring egalitarian economic and at the same time socio-political justice as well to the people in general of the country.  

The writer is a retired Professor of Economics, BCS General, Education Cadre

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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