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Promoting Shared Prosperity in South Asia

Author

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  • Ejaz Ghani
  • Lakshmi Iyer
  • Saurabh Mishra

Abstract

The geography of poverty has changed. More than 70 percent of the world’s poor live not in low-income countries, but in middle-income countries. In 2008, nearly 570 million people lived on less than US$1.25 a day in South Asia, compared to 385 million in sub-Saharan Africa. In addition, nearly 70 percent of the poor people in South Asia live in the lagging regions. Improving the living standards of these regions is crucial to achieving the goal of shared prosperity. Economic growth is not sufficient to enable the lagging regions of South Asia to catch up with the leading regions, in terms of proportional reductions in poverty rates. Policies must be specifically targeted toward achieving greater growth and poverty reduction in these regions. One particular policy channel to achieve shared prosperity is pro-poor fiscal transfers. For the most part, interstate fiscal transfers in South Asian countries do promote equity through transfer of resources to poorer regions, but this outcome usually occurs when pro-poor redistribution has explicit rules and transparency. Further, simply directing financial resources to lagging regions may not be sufficient, and may need to be complemented with increases in capacity, transparency, and participation to facilitate accountability at the local level.
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Suggested Citation

  • Ejaz Ghani & Lakshmi Iyer & Saurabh Mishra, 2013. "Promoting Shared Prosperity in South Asia," World Bank Other Operational Studies 17028, The World Bank.
  • Handle: RePEc:wbk:wboper:17028
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    References listed on IDEAS

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    1. Martin Ravallion, 2012. "Why Don't We See Poverty Convergence?," American Economic Review, American Economic Association, vol. 102(1), pages 504-523, February.
    2. Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 80(1), pages 198-227, June.
    3. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April.
    4. Kanbur, Ravi & Sumner, Andy, 2011. "Poor Countries or Poor People? Development Assistance and the New Geography of Global Poverty," CEPR Discussion Papers 8489, C.E.P.R. Discussion Papers.
    5. Pranab Bardhan, 2002. "Decentralization of Governance and Development," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 185-205, Fall.
    6. Seabright, Paul, 1996. "Accountability and decentralisation in government: An incomplete contracts model," European Economic Review, Elsevier, vol. 40(1), pages 61-89, January.
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    Cited by:

    1. Martin Rama & Tara Béteille & Yue Li & Pradeep K. Mitra & John Lincoln Newman, 2015. "Addressing Inequality in South Asia," World Bank Publications, The World Bank, number 20395, August.

    More about this item

    Keywords

    Macroeconomics and Economic Growth - Subnational Economic Development Finance and Financial Sector Development - Debt Markets Poverty Reduction - Rural Poverty Reduction Macroeconomics and Economic Growth - Regional Economic Development Poverty Reduction - Achieving Shared Growth;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • H1 - Public Economics - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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