A presentation by Shanta Devarajan from the 2009 BASIS Conference on "Escaping Poverty Traps: Connecting the Chronically Poor to the Economic Growth Agenda."

1. Why are there so many poor people in
Africa and South Asia?
Shanta Devarajan
World Bank
http://africacan.worldbank.org

2. 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
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
AnnualchangeinrealGDPper
capita(%)
Developing countries Developing countries, excluding China and India
Sub-Saharan Africa High-income countries

3. 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.

4. While gross primary enrollment rate is high,
completion rate is low in most of countries
0
20
40
60
80
100
120
140
South
Africa
Botswana Nigeria Ethiopia Cameroon Equatorial
Guinea
Gross primary enrollment
Completion rate
Source: WDI.

5. GDP growth in South Asia
has been strong and accelerating
Source: World Development Indicators

6. 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.

7. Big gaps between enrolment and
completion in primary education
Source: Schweitzer, Julian. 2006. “Human development in South Asia.” mimeo, World Bank: Washington, DC.

8. 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
%Immunized
Bolivia
China
India
Indonesia
Kenya
Source: WDI Indicators Database

9. I. Infrastructure in India and Africa
• Water in India

10. 24x7 water: A pipe dream?
Source: Data collected from the water boards or utilities
per capita lpd vs. hours of supply/day
Goa
Chandigarh
Mumbai
Delhi
Patna
Ludhiana
Jodhpur
Dasuya
Dera Bassi
Paris
Jaipur
Ahmedabad
Bikaner
Bangalore
Gurdaspur
Bathinda
Bharatpur
Udaipur
Chennai 32
80
105
106
108
123
133
145
149
173
184
190
220
222
223
240
332
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

11. Service to the poor is big business

12. Politics, patronage, & network
services
POLITICIANS
EMPLOYEES
UTILITY
COMPANY
CONNECTED
POPULATION
Operational subsidies
Appointment of directors
Political favours
Artificially
depressed
tariffs
Poor
quality of
service
Over-staffing
UNCONNECTED
POPULATION
High prices
CONTRACTORS
Untendered contracts

14. I. Infrastructure in India and Africa
• Water in India
• Transport corridors in Africa

15. SELECTED
CORRIDORS
OF THE
STUDY

16. 2
3.5 4
5 5 5
7
8
11
0
2
4
6
8
10
12
14
Pakistan
Brazil
USA
China
Western
Europe–long
distance
Africa-
Durban-
Lusaka
Africa-Lomé-
Ouagadougou
Africa–
Mombasa
Kampala
Africa-
Douala-
Ndjaména
Averagetransportprices
(inUScentspertkm)
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

17. 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

18. Average transport prices (constant and current) from Mombasa to Kigali
0
50
100
150
200
250
300
350 1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Years
US$/Ton
0
100
200
300
400
500
600
700
800
900
US$/Ton
Current transport tariffs (left) Real transport tariffs - GDP deflator (right)
After liberalizationBefore liberalization

19. II. Agriculture in India

20. 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

21. 0
1
2
3
4
5
6
7
1975-79 1980-84 1985-89 1990-94 1995-99 2000-02
PercentofAg.GDP
Subsidies
Public Investment
Public expenditures in India

22. III. Labor regulations in India and
Sri Lanka

23. Employment regulations in
South Asia are among the
most restrictive in the world
Source: Doing Business 2006. World Bank: Washington, DC.

24. “Missing middle”
India
1989-90
0 10 20 30 40 50
5-9
10-49
50-99
100-199
200-499
500+
% distribution of employment
Malaysia
1981
0 10 20 30 40 50
5-9
10-49
50-99
100-199
200-499
500+
% distribution of employment

25. 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

26. 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

27. IV. Education in India and Uganda

28. 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
Percent
Level 2 reading
Subtraction/Division
Source: ASER 2007

29. All India Teacher Absence Map
(Public Schools)
State
Teacher
Absence (%)
Maharashtra 14.6
Gujarat 17.0
Madhya Pradesh 17.6
Kerala 21.2
Himachal
Pradesh 21.2
Tamil Nadu 21.3
Haryana 21.7
Karnataka 21.7
Orissa 23.4
Rajasthan 23.7
West Bengal 24.7
Andhra Pradesh 25.3
Uttar Pradesh 26.3
Chhatisgarh 30.6
Uttaranchal 32.8
Assam 33.8
Punjab 34.4
Bihar 37.8
Jharkhand 41.9
Delhi -
All India
Weighted 24.8%
Source: Kremer, Muralidharan, Chaudhury, Hammer, and Rogers. 2004. “Teacher Absence in India.”

30. 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
02,0004,0006,000
SalaryinRs.
Private Public
Unadjusted Adjusted Unadjusted Adjusted
Teacher Compensation

31. -400-2000200400600
DeviationfromMeanSalaryinRs
0 10 20 30
Days 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.

32. 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

33. Uganda: What enumerators found

34. V. Health in India and Chad

35. Distribution of Health Care Subsidies
All India, 1995-6
0
5
10
15
20
25
30
35
Poorest II III IV Richest
Hospitals
Primary Health
Centers
Source: calculations based on Mahal et. al. 2001 – referred to in MTA para. 2.2.68

36. India 2003: Doctor absence from
PHC’s
by state and reason
0
10
20
30
40
50
60
70
80
B
ihar
Jharkhand
O
rissa
U
ttaranchal
U
ttarPradeshA
ssam
R
ajasthan
M
adhya
Pradesh
C
hhatisgarh
W
estB
engal
A
ndhra
Pradesh
K
arnataka
Tam
ilN
adu
M
aharashtraG
ujaratH
aryanaPunjab
Official Duty
Leave
No reason

37. Quality is low, even when present
(Delhi doctors)
0.1.2.3.4
%Whoaskedtherelevantquestion
Private MBBS Private, No MBBS Public
...And What They Do
What 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)

38. 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.

39. How to end poverty
Market failures
Efficiency & Equity
Government
failure

40. How to end poverty
Market failures
Efficiency & Equity
Government
failure

41. “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