Why are so many poor people in Africa and South Asia?
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Transcript of Why are so many poor people in Africa and South Asia?
Why are there so many poor people in Africa and South Asia?
Shanta Devarajan
World Bank
http://africacan.worldbank.org
For the first time in 20 years, Africa’s growth is equal to that of developing countries
(except China and India)
Per capita income
-4
-2
0
2
4
6
8
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
An
nu
al c
ha
ng
e in
re
al G
DP
pe
r c
ap
ita
(%
)
Developing countries Developing countries, excluding China and India
Sub-Saharan Africa High-income countries
Africa’s growth has not brought sufficient progress on poverty and social outcomes
Number of countries that will achieve MDGs Number of population that will achieve MDGs
Source: Global Monitoring Report, 2007.
While gross primary enrollment rate is high, completion rate is low in most of countries
0
20
40
60
80
100
120
140
SouthAfrica
Botswana Nigeria Ethiopia Cameroon EquatorialGuinea
Gross primary enrollment
Completion rate
Source: WDI.
GDP growth in South Asia has been strong and accelerating
Source: World Development Indicators
Poverty is falling but inequality is rising
Source: Narayan, Ambar, et. al. 2006. “The challenge of promoting equality and inclusion in South Asian countries.” mimeo, World Bank: Washington DC.
Big gaps between enrolment and completion in primary education
Source: Schweitzer, Julian. 2006. “Human development in South Asia.” mimeo, World Bank: Washington, DC.
Immunization rates in India are low and stagnant
Measles Immunization: 12-23 Months
50
55
60
65
70
75
80
85
90
2000 2001 2002 2003 2004
Year
% Im
mu
niz
ed Bolivia
ChinaIndiaIndonesiaKenya
Source: WDI Indicators Database
I. Infrastructure in India and Africa
• Water in India
24x7 water: A pipe dream?
Source: Data collected from the water boards or utilities
per capita lpd vs. hours of supply/dayGoa
Chandigarh
Mumbai
Delhi
Patna
Ludhiana
Jodhpur
Dasuya
Dera Bassi
Paris
Jaipur
Ahmedabad
Bikaner
Bangalore
Gurdaspur
Bathinda
Bharatpur
Udaipur
Chennai 3280
105106
108123
133145
149
173184
190220
222223
240332
341
1.5 2.5 1.5
8 10
2.5 1.5
2 3
8 10
2.5 10 10
4 5
10
8
24150
Service to the poor is big business
Politics, patronage, & network servicesPOLITICIANS
EMPLOYEESUTILITY
COMPANY
CONNECTEDPOPULATION
Operational subsidiesAppointment of directors
Political favours
Artificiallydepressed
tariffs
Poorquality of
service
Over-staffing
UNCONNECTEDPOPULATION
High prices
CONTRACTORS
Untendered contracts
I. Infrastructure in India and Africa
• Water in India
• Transport corridors in Africa
SELECTED CORRIDORS
OF THE STUDY
23.5 4
5 5 5
78
11
0
2
4
6
8
10
12
14
Pakis
tan
Bra
zil
US
A
Chin
a
Weste
rn
Euro
pe –
long
dis
tance
Afr
ica-
Durb
an-
Lusaka
Afr
ica-
Lom
é -
Ouagadougou
Afr
ica –
Mom
basa
Kam
pala
Afr
ica-
Douala
-
Ndja
ménaA
vera
ge t
ransport
prices
(in U
S c
ents
per
tkm
)
Central Africa East Africa West Africa Southern Africa France
Variable costs (USD per veh-km) 1.31 0.98 1.67 1.54 0.72
Fixed costs (USD per veh-km) 0.57 0.35 0.62 0.34 0.87
Total transport costs (USD per veh-km) 1.88 1.33 2.29 1.88 1.59
Transport costs are not excessively high in Africa comparing to France for example
However, average transport prices in Africa are high in a global comparison
Corridor Gateway - Destination Price(USD/ veh-km)
Variable cost
(USD/veh- km)
Fixed cost(USD/veh- km)
Average yearly
mileage (‘000)
Profit margin
(%)
West Africa
Tema/Accra - Ouagadougou 3.53 1.54 0.66 30-40 80%
Tema/Accra - Bamako 3.93 1.67 0.62 40-50 80%
Central Africa
Douala - N’Djaména 3.19 1.31 0.57 60-70 73%
Douala - Bangui 3.78 1.21 1.08 50-60 83%
Ngaoundéré - N’Djaména 5.37 1.83 0.73 20-30 118%
Ngaoundéré - Moundou 9.71 2.49 1.55 10-20 163%
East Africa
Mombasa - Kampala 2.22 0.98 0.35 130-140 86%
Mombasa - Nairobi 2.26 0.83 0.53 90-100 66%
Southern Africa
Lusaka - Johannesburg 2.32 1.54 0.34 160-170 18%
Lusaka - Dar-es-Salaam 2.55 1.34 0.44 160-170 62%
An interesting observation: On Central Africa corridor, trucks with lower average yearly mileage
have the higher profit margins
Average transport prices (constant and current) from Mombasa to Kigali
0
50
100
150
200
250
300
35019
89
199
0
199
1
1992
1993
1994
199
5
199
6
199
7
1998
199
9
200
0
2001
2002
2003
200
4
200
5
200
6
Years
US
$/T
on
0
100
200
300
400
500
600
700
800
900
US
$/T
on
Current transport tariffs (left) Real transport tariffs - GDP deflator (right)
After liberalizationBefore liberalization
II. Agriculture in India
Agriculture value added per worker, 1990=100
90
100
110
120
130
140
150
160
170
1990 1992 1994 1996 1998 2000 2002 2004 2006
Bangladesh China India
China
Bangladesh
India
0
1
2
3
4
5
6
7
1975-79 1980-84 1985-89 1990-94 1995-99 2000-02
Perc
ent of A
g. G
DP
Subsidies
Public Investment
Public expenditures in India
III. Labor regulations in India and Sri Lanka
Employment regulations in South Asia are among the
most restrictive in the world
Source: Doing Business 2006. World Bank: Washington, DC.
“Missing middle”
India1989-90
0 10 20 30 40 50
5-9
10-49
50-99
100-199
200-499
500+
% distribution of employment
Malaysia1981
0 10 20 30 40 50
5-9
10-49
50-99
100-199
200-499
500+
% distribution of employment
Complex labor legislation and regulations
• Altogether about 45 central laws and 170 State statutes directly deal with labor market issues. Labor is a concurrent subject.
• Industrial Relations– Trade Unions Act, 1926– Industrial Disputes Act (IDA) 1947
• Working Conditions– The Factories Act, 1948– The Industrial Employment (standing orders), 1946– The Contract Labour Act, 1961
• Wages– The Payment of Wages Act, 1937– The Minimum Wages Act, 1948
• Social Security and Insurance– Workmen Compensation Act, 1923– Employee State Insurance Act, 1948– Employees Provident Funds Act, 1952
• Plus a number of state laws such as the Shops and Establishment Act
Some 533,000 Cases pending-- 28,000 for more than 10 years
Major States No. of Cases Pending No. of cases pending for
More than 10 years Assam 189 138 Bihar 5,200 566 Delhi 28,837 2,342 Gujarat 133,916 8,616 Kerala 3,450 63 Karnataka 17,457 2,924 Maharashtra 142,345 11,508 Madhya Pradesh 89,341 0 Punjab 14,784 110 Rajasthan 20,066 775 Tamil Nadu 21,713 150 Uttar Pradesh 22,539 10,303 West Bengal 2,225 283 Total ( All States & UT) 533,038 28,864
IV. Education in India and Uganda
Learning outcomes in India
Percent of Std. 2-5 children who cannot read or do sums
0
10
20
30
40
50
60
70
Public Private
Pe
rce
nt Level 2 reading
Subtraction/Division
Source: ASER 2007
All India Teacher Absence Map (Public Schools)
StateTeacher
Absence (%)Maharashtra 14.6Gujarat 17.0Madhya Pradesh 17.6Kerala 21.2Himachal Pradesh 21.2
Tamil Nadu 21.3Haryana 21.7Karnataka 21.7Orissa 23.4Rajasthan 23.7West Bengal 24.7Andhra Pradesh 25.3Uttar Pradesh 26.3Chhatisgarh 30.6Uttaranchal 32.8Assam 33.8Punjab 34.4Bihar 37.8Jharkhand 41.9Delhi -All India Weighted 24.8%
Source: Kremer, Muralidharan, Chaudhury, Hammer, and Rogers. 2004. “Teacher Absence in India.”
Public School Teachers are paid a (lot) more
• Definitions• Unadjusted Wage
is the average wage of teachers in the public and private sector
• The adjusted wage is what a 25 year old female with a bachelors degree and a 2-year teacher training course residing locally would earn in the public and private sector
1231
1619
6178
5299
02
,00
04
,00
06
,00
0S
ala
ry in
Rs.
Private Public
Unadjusted Adjusted Unadjusted Adjusted
Teacher Compensation
-400
-200
020
040
060
0D
evia
tion
from
Mea
n S
alar
y in
Rs
0 10 20 30Days Absent per Month
Private Schools Public Schools
Teacher Absenteeism and Compensation
The private sector pays more absent teachers
less
The public sector pays more absent teachers
more
Salary results are presented as“deviations from mean”. So the number
200 on the vertical axis means that the person’s salary is Rs.200 more than the average salary for the sector The figure is based on a non-parametric
plot of deviations from mean salary against the number of days absent.
Absence rate among teachers
Country Rate (percent)
Bangladesh 15
Ecuador 14
India 25
Indonesia 19
Papua New Guinea 15
Peru 11
Zambia 17
Uganda 27
Uganda: What enumerators found
V. Health in India and Chad
Distribution of Health Care Subsidies All India, 1995-6
0
5
10
15
20
25
30
35
Poorest II III IV Richest
Hospitals
Primary HealthCenters
Source: calculations based on Mahal et. al. 2001 – referred to in MTA para. 2.2.68
India 2003: Doctor absence from PHC’s
by state and reason
0
10
20
30
40
50
60
70
80
Bihar
Jhar
khan
d
Orissa
Uttara
nchal
Uttar P
rades
h
Assam
Rajas
than
Mad
hya P
rades
h
Chhatis
garh
Wes
t Ben
gal
Andhra P
rades
h
Karnat
aka
Tamil
Nadu
Mah
aras
htra
Gujara
t
Harya
na
Punjab
Official Duty
Leave
No reason
Quality is low, even when present (Delhi doctors)
0.1
.2.3
.4%
Who
ask
ed t
he r
elev
ant
ques
tion
Private MBBS Private, No MBBS Public
...And What They DoWhat They Know
% Asked (DCO) % Asked (Vignettes)
What they do is in blue, what they know is in red. MBBS doctors are (roughly) the equivalent of MDs in the US. Das and Hammer (2005)
Chad
“Although the regional administration is officially allocated 60 percent of the ministry's non-wage recurrent expenditures, the share of the resources that actually reach the regions is estimated to be only 18 percent. The health centers, which are the frontline providers and the entry point for the population, receive less than 1 percent of the ministry's non-wage recurrent expenditures.”
-- Bernard Gauthier and Waly Wane, “Leakage of public resources in the health sector : An empirical investigation of Chad,” 2008.
How to end poverty
Market failuresEfficiency & Equity
Government
failure
How to end poverty
Market failuresEfficiency & Equity
Government
failure
“It is not sufficient to contrast the imperfect adjustments of unfettered private enterprise with the best adjustment that economists in their studies can imagine. For we cannot expect that any public authority will attain, or will even whole heartedly seek, that ideal. Such authorities are liable alike to ignorance, to sectional pressure, and to personal corruption by private interest.”
--A.C. Pigou, 1920