The poor half billion in South Asia : what is holding back lagging regions?

South Asia presents an interesting paradox, it is the second fastest growing region in the world, and it is also home to the largest concentration of people living in debilitating poverty. While South Asia is at a much more advanced stage of development, it has many more poor people than Sub-Saharan Africa. Even as growth has reduced poverty rates in South Asia, the poverty rates have not fallen fast enough to reduce the total number of people living in poverty. The number of people living on less than $1.25 a day increased from 549 million in 1981 to 595 million in 2005. Most of the poor live in India, and their numbers have increased from 420 in 1981 million to 455 million in 2005. Social indicators, such as human development and gender parities, have also not kept up with the pace of income growth. More than 250 million children are undernourished and more than 30 million children do not go to schools. More than one-third of adult women are anemic. The share of female employment in total employment is also extremely low. How can South Asia be an emerging global economic powerhouse and yet have high poverty rates, poor human development indicators, and huge gender disparities? Can high-income growth co-exist with dismal social outcomes? The answer depends on where one looks. National averages hide vast regional disparities and are misleading. A sub national focus sharpens and also explains the paradox of South Asia. This is the focus of this volume. The leading regions in South Asia have done extremely well. They are the envy of other middle-income countries. Millions of people in leading regions have come out of poverty. Poverty in the leading regions can be eliminated in a generation, provided high growth can be sustained. The story of lagging regions is very different. Growth and poverty reduction have turned out to be extremely challenging. The gap between lagging and leading regions has increased. Poverty, human misery, and gender disparities in South Asia are largely concentrated in the lagging regions. The distinction between lagging and leading regions is so sharp that they seem to be anchored in two different centuries. The author examine the well-being of the poor half billion in South Asia from four different perspectives. First, the author analyzes spatial disparities in income, poverty, human development, and gender disparities within countries and across countries in South Asia in a global setting. Second, the author examine if poverty acts as a barrier to growth. Poverty traps can occur if certain regions are unable to make the required improvements for growth or because they are not able to generate enough productivity improvements. Third, the author explore why certain regions are growing, while others are lagging behind. The author focus at the sub national level on the role that economic geography, globalization, and institutions (business climate, education) have played in growth, and whether they will continue to favor growth in the already-prosperous regions. Fourth, the author asks whether policymakers should wait for growth to lift all boats or take direct policy actions to reduce poverty.