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3. PRCS ECONOMIC COOPERATION AND DEVELOPMENT ASSISTANCE TO BANGLADESH: IMPLICATIONS FOR POVERTY REDUCTION IN BANGLADESH
4. LESSONS FOR BANGLADESG FROM PRCS POVERTY REDUCTION SUCCESS
Socio-economic Differences
Indicators Annual population growth (%) Population density (per sq. km.) Urban population (%) Annual GDP growth rate (%) GDP per capita, constant 2000 $ Agri. value added, % of GDP Gross investment, % of GDP Bangladesh 1980 2.68 694 15 4.8 226 32 14 2000 1.82 1081 24 5.9 335 26 23 1980 1.25 105 20 7.8 186 30 35 PRC 2000 0.79 135 36 8.4 949 15 35
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PRC
started with a command economy comprehensive land reforms resulted in dramatic change in asset distribution economic activities were influenced through state owned enterprises (SOEs), and the township and village enterprises (TVEs) Structural change in PRC has followed the classical pattern with transformation from primary (agriculture) to secondary (manufacturing) activities; over the last 25 years, manufacturing had doubled its share of employment and tripled its share of output in GDP as a more equal society, economic policies in PRC had a very different qualitative impact than similar policies in a more unequal society as in Bangladesh
started with a traditional mixed economy since independence Expanded private sector during the phase of globalization, and reduced state regulations since the 1990s Macroeconomic policies focused more on economic stability no significant land (and rural) reforms and/or other strategies to bring about substantial redistribution of assets The structural move in Bangladesh has been mainly from agriculture) to tertiary (services) sector; The share of agri. in GDP has fallen from more than 60% to around 20% over the last two decades but its share in employment continues to be nearly 50%
Socio-economic Similarities
Despite the above differences, both Bangladesh and PRC face rather similar economic problems in certain respects, such as:
Sustainability of growth and Emerging inequalities
Economic growth in both countries have been associated with: sharp increases in spatial and vertical inequalities greater fragility in incomes among the poor and the marginalized groups adverse shifts in several climate change indicators However, while the policy response in PRC has been to reduce inequality through changes in tax rates, greater public investment in western and interior regions and improving social security benefits, inequality-reducing policies in Bangladesh are yet to receive high priority within the policy agenda.
PRC has made remarkable progress in reducing poverty since 1978; The number of the absolute poor in rural areas dropped from 250 million in 1978 to 23.65 million in 2005, representing a decline in poverty incidence from 30.7 percent in 1978 to 2.5 percent in 2005; However, there has been worsening of inequality in PRC over the last three decades; Gini-coefficinnt of consumption in PRC has risen from 0.30 in 1978 to 0.45 in 2002; Data also suggests significant increase in rural-urban income differential over the same period;
The incidence of poverty has also declined in Bangladesh over the past several years; As the estimates indicate, income poverty has declined from 56.6 percent in 1991-92 to 31.5 percent in 2010; However, compared with the poverty reduction achievement of PRC, Bangladeshs performance is less spectacular.
Institutional Set up for Poverty Reduction in PRC and Bangladesh Various studies point out that the existing social safety net programs (SSNs) in Bangladesh provide limited coverage which cannot cope with the magnitude of extreme poverty and marginality that exists in the country. The SSNs cover about 15 million people, and consequently fall drastically short in coverage for about 24 million people who belong to the extremely poor category. Furthermore, the SSNs cover mostly the rural poor, whereas the number of urban extreme poor is also large and the nature of urban poverty is more severe than rural poverty in certain respects. Also, there is no integrated national policy for social protection and safety net programs in Bangladesh. Therefore, the extent, nature and mechanisms of most of the safety net programs undergo changes in an ad hoc manner especially with the change of the government. There is also a lack of integration and coordination among various safety net programs and the providers.
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Lessons from PRCS Poverty Reduction Success: Implications for Bangladesh PRCs poverty reduction has been a process of constant learning and experimentation PRCs Key Factors of Success
Stable political environment and rapid economic growth Growth of agricultural GDP Development of non-state economic sector Strong Government commitment throughout the implementation of the Plans Supportive administrative system at all levels
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