South Asia revitalised

 Yet, the editor has done his best to keep the academic diction at a low, so it is not impossible to comprehend the message. An area with an accelerating growth, South Asia has been attracting plentiful attention these days. Big business sees here a gigantic catch, but the region’s poverty-stricken environment does not enthuse the sociologist. Must the rich-poor divide continue to increase and the marginalised condemned to remain enclosed in poverty-traps?

It cannot be denied that governments, inspite of their many faults, do try to alleviate the misery found in South Asia through social assistance programmes. Struggling with the printed statistics, one can get a bit optimistic with “absolute reductions in poverty and infant mortality, and significant increases in education indicators in initially poor countries and regions.” This is the time when the South Asian countries should make a determined bid to speed up economic and social developments in the regions that are still far behind in gaining the fruits of education and development.    

Marren Bosker and Harry Garretsen find a new economic geography in the making in South Asia. Compared with the rest of the world, this area cannot be easily generalised. For instance the bulk of Nepal’s market access is foreign while for India it is from its own economy which is very large. Despite market accessibility, the South Asian countries do not appear to have any considerable GDP per capita, probably due to the international trade patterns of the region. They are focused towards world markets instead of openings in the neighbourhood. A change is not easy either, given the history of political disagreement and linguistic and cultural disparities in these areas. South Asia has a goodly amount of road network but the roads are average and disorganised and long-winding customs at the borders add to the problem.

A perceptive study on the trade benefits that accrue to South Asia comes from Pravin Krishna, Devashish Mitra and Asha Sundaram. They open with an important question: Who benefits from trade? There is an unhesitating answer too. Yes, definitely increased trade will be to the advantage of labour in South Asia but not all regions will gain an equal portion of the pie. One reason would be the lack of uniform mobility.

Secondly, governmental interference can be a damper. For instance, “in Sri Lanka, all firms employing more than 15 workers need the consent of the Commissioner of Labor before dismissing a worker with more than one year of service”!  Again, one cannot generalise with ease when dealing with South Asia due to paucity of firm data and econometric methodologies. It is with plenty of trepidation that the authors study the statistics on hand to arrive at the predictable conclusion:

“We find evidence that, for India, poverty has been decreasing over time in Indian states but more slowly in lagging states. While there is strong evidence that trade liberalisation led to a decline in poverty across all leading states, there is evidence that either this decline arising from trade liberalisation was smaller or that there may not have been a decline in poverty due to trade liberalisation in the lagging states.”

Metal more attractive comes from another trio, Ana Fernandes, Maddalena Honorati and Taye Mengistae who pose the question: Is growth constrained by institutions? Ah, corruption. Here is a footnote, as incisive and relevant as the essay itself: “Does this (corruption in courts) signal the failure of property rights institutions or contracting institutions? The answer is surely a bit of both. On the one hand, bribes paid by private parties to judges who are public officials represent state expropriation as discussed earlier. And at the same time corruption makes the conflict resolution services provided by courts less efficient.”

Other watchers of global economics (Dushyanta Raju, Saurabh Mishra, Caglar Ozden and Mirvar Sewedeh among others) study the effect of educational policies, decentralisation, migration and agricultural growth in helping the lagging regions in South Asia overcome their poverty-ridden state. They are all optimists and that can be a great inspiration. As the editor says: “Not so long ago, Bihar, the poorest state in India, was known for its law and order problems (extortion, carjacking, kidnapping) and low growth. However, with the restoration of law and order, improved governance, increased use of fiscal transfers, and greater market integration and human mobility, Bihar has now started to turn a corner.  So can others.”

If a resurgent Bihar is here today, can the revitalised South Asia be far behind?

The Poor Half Billion in South Asia
Edited by
Ejaz Ghani
Oxford, 2010,
pp 342,
795