The districts suffer from substantial illiteracy (between 41% in Jhapa to 24% in Darjeeling), although there has been some rapid progress on this front over the past years (Table 4). Despite the progress, the majority of the adult population has not completed primary education in all districts but Darjeeling. Uttar Dinajpur has a much lower rate of at least primary educated population than the rest of India. Panchagarh has the lowest rate of primary school attainment in 2010 across all districts, a reflection of the low rate for Bangladesh relatively to Nepal and India. The share of secondary educated population is low everywhere and that of graduates negligible except in Darjeeling. This type of education profile along with the population figures suggests a pattern of comparative advantage in these districts skewed towards unskilled labor intensive activities. The only partial exception may be Darjeeling district, which has a record of slightly better education achievements. Nepalese districts, particularly Jhapa, may have some advantage in more land intensive agriculture given the relatively higher land-labor ratio.

# <u>Development and poverty</u>

Available data paint a mixed picture about the level of economic development and poverty across the districts under analysis. Overall the data suggests that, while not amongst the poorest in South Asia, these districts - with the exception of Darjeeling - are poor relatively to the South Asian average. This picture is consistent with low levels of intra-regional trade, which do not help border districts flourish as the most direct beneficiaries of the potential gains from trade. On the other hand these districts – with the exception of Uttar Dinajpur - are also not poorer than the national average. In fact in the case of Darjeeling and Jhapa, they are considerably better-off than their countries’ average, underscoring the importance of the tea production and trade in their economic achievements.

In Bangladesh, the district of Panchagarh has a poverty rate below the national average but it is above the Indian poverty rate (Table 5). On the Indian side, the case study districts of West Bengal are quite different. In the last decade Darjeeling has been catching up with the rest of the country in terms of GDP and poverty and has eventually achieved better indicators than the average around the end of the past decade (table 5).<sup>5</sup> On the other hand in Uttar Dinajpur the poverty rate is higher and the wages and income per capita lower than the Indian average. In particular, over one in three residents of the district were poor in 2011-12, a rate 50% higher than the Indian one.

In Nepal, Ilam and Jhapa rank among the leading districts in the country on a number of measures of output and welfare, including components of the Human Development Index in which both are in the top quartile among Nepal’s 75 districts. Life expectancy is higher in Ilam than Jhapa, but literacy, mean years of schooling and income per capita are higher in the better connected Jhapa. Jhapa is also the fourth richest district in terms of aggregate output among Nepal’s 75 districts, compared to Ilam which stands at 27<sup>th</sup> ; however, in per capita terms, Ilam’s GDP per capita is higher at US$780 than Jhapa’s US$759. Both districts rank in the second quartile among the country’s 75 districts, and they are just above the national average (Table 5). The poverty rate in both districts is also not severe by national standards: it is almost one-third the national average in Ilam. However, the level and the growth of wages in the two districts are lower than the national average.

Comparing the data for districts on the India-Nepal border, it is worth noting that while Jhapa and Ilam score above average among Nepali districts, they lag on most indicators in comparison to their cross-border neighbors, and Darjeeling in particular. In relative rankings, Jhapa and Ilam fare better because the most backward districts in terms of development are located in Nepal’s remote mid-

> 5 The Indian poverty data use the latest Tendulkar poverty lines, which are considered more reliable to measure poverty than the older Lakdawala poverty lines (Government of India, 2009).

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