Bangladesh Poverty Assessment: Building on Progress

1. Bangladesh Poverty Assessment: Building on Progress Poverty Trends and Profile Dhaka, October 23rd 2002

2. 1. Trends in Poverty during the Nineties

3. Trends in Income Poverty CBN poverty measures based on various HIES show: • Decline of roughly one percentage point per year during the nineties • Number of the very poor declined by only 2.7 million, and of poor remained unchanged • Poverty higher in rural (53%) than in urban (37%) areas, but declined at roughly same rate • Considerable regional variation: Highest in Rajshahi (61%) and lowest in Dhaka (45%) • Poverty rates stagnated in Chittagong division

4. Trends in Output and Employment • … but … • Under-employment rates still very high, indicative of considerable slack in the labor market • Unemployment rates relatively low (3.7%), but are higher (9%) among young urban males (aged 15-29 years) • Women still considerably less likely to participate in the labor force than men, and poor working women are at greatest risk of under-employment • Number of child laborers down from 5.6 to 4.3 million between 95-96 and 99-00. However, one-fourth of children 10-14 estimated to be working rather than studying Progress … • Per capita GDP increased 36 percent during the 1990s, twice the average for low and middle income countries • The labor force grew by 1 million each year to 60 million in 1999-2000 • Private formal sector’s employment share went up from 9 to 14% between 1995-96 and 1999-00, while the public sector’s share remained at 4-5% • Under-employment declined from 43% to 35% over the decade • Labor force participation by women increased from 14% to 23%

5. Non-income Poverty Measures • Rising real wages in agricultural, manufacturing, and construction sectors • Improvements in quantities and composition of food bundle consumed. • per capita fish consumption up 9% • per capita sugar consumption up 11% • per capita meat consumption up 48% • Anthropometric data suggests good progress in reducing child malnutrition • Significant improvements in infant & child mortality, and in life expectancy • Bangladesh has achieved gender and urban-rural parity in enrollment rates • Evidence of reduced vulnerability to food price variation, and improved disaster-coping mechanisms Other indicators confirm progress during the 1990s…

6. Non-income Poverty Measures (cont.) • Malnutrition rates continue to be high • Maternal mortality rate among the highest in the world • Large share of population continues to be at risk to adverse impact of shocks • Deteriorating law-and-order a source of rising concern, not just for the poor • More than half (55%) of the population aged 7 and older illiterate • Gains in enrollment appear to have tapered off or fallen in recent years • Rising concern being expressed about quality of education imparted through country’s education system … but also illustrate the significant challenges that remain

7. Impact of Growth and Inequality on Poverty Growth Incidence Curve for Bangladesh, 1991-92 to 2000 During the 1990s: • Growth in per capita expenditures accompanied by rising inequality • All groups benefited from growth, but the very poor and the better-off benefited relatively more from growth than the middle-class • Rural areas experienced lower growth compared to urban, but growth was more broad-based in rural areas •  Equivalent decline in the incidence of poverty in the two sectors

8. Rural and Urban Growth Incidence Curves1991-92 to 2000 % of population ranked by per capita expenditures

9. 2. Profile of the Poor in Bangladesh

10. Poverty Profile: Land & Education key Assets • Land ownership: • Three-fifths of the poor population in Bangladesh own less than 0.05 acres • Incidence of poverty amongst the functionally landless is more than three times that of the population owning 2.5+ acres Level of Education of Head: • Nearly three-quarters of the poor population have an illiterate household head • Incidence of poverty amongst those with an illiterate head eight times that of those with a head with higher education

11. Other Household Assets • Considerable disparities in other asset ownership (health, housing, business assets, etc.) Asset ownership Gini 0.7 vs. Income Gini of 0.4 • Asset portfolios of the poor also differ from those of the rich

12. Sources of Income of the Population • Income earning strategies are heterogeneous across and within different types of households • High dependence of the poor on daily wage labor income • Agriculture (crops, livestock, fishing) is an important source of income, although its importance declines steadily with income • Even for the poorest tenth of the population, 40% of income is from non-farm sources

13. Some Findings of Wage and Per Capita Expenditure Regressions • Per capita expenditures in Bangladesh are positively correlated with: • Land ownership:Household that own up to 0.5 acres have 7% higher expenditures than landless households • Common-property resources:Expenditures are 2-3% higher on average in villages where such assets are present • Infrastructure:Expenditures are between 6-12% higher in villages with electricity, phones, and a nearby bus stop Wage analysis shows that labor markets in Bangladesh attach premiums to: • Education, for both men and women • Non-farm employment relative to agricultural daily wage labor • Public sector jobs relative to those in the private sector • Location closer to metropolitan centers

14. Poverty Projections under Alternate Growth Scenarios Projections based on Bangladesh’s growth record over the nineties suggest that an acceleration in growth rate to 6 percent per annum needed to halve poverty by 2015