**Policy, Research, and External Affair**

# **World Development Report**

# WPS **586**

- This paper a product of the Agricultural Policies Division, Agriculture and Rural Development Departmentwas prepared as a background paper for the _1990 World Development Report_ on poverty. The paperdrawson results from aPRE researchproject,Policy Analysis and Poverty: Applicable Methods and Case Studies. Copies are available free from the World Bank, 1818 H Street NW, Washington DC 20433. P;ease contact the World Development Report office, room S 13-060, extension 31393 (3' pages).

Did poverty increase in Bangladesh in the 1980s? How responsive is poverty in Bangladesh to economic growth and changes in relative inequalities? What are the prospects for poverty alleviation through currently anticipated economic growth in Bangladesh?

Ravallion addresses these questions using a narrow definition of poverty, whereby a person is judged to be poor if he or she resides in a household the income of which does not allow a consumption level that permits adequate nutrition. He concludes:

* The recent evidence of a decline in absolute numbers of poor in Bangladesh in the 1980s is unconvincing. The rate of growth in real per capita consumption of 10 percent a year implied by the underlying household spending surveys is too high to be believed. One cannot assume that the national accounts are accurate, but their implied growth rate of about 0.5 percent a year is more plausible. Assessments of growth in the 1980s consistent with national accounts data (using household surveys only to measure _relative_ inequalities) suggest that the proportion of the population deemed to be poor has remained fairly stable in recent years - while absolute numbers of poor have increased.

* Per capita growth rates in Bangladesh have been below average for South and Southeast Asia in the 1980s, and few observers expect this to change in the 1990s.

* The growth rates needed to prevent an increase in the absolute numbers of poor in Bangladesh, or to attain any given rate of poverty reduction, are higher than similar calculations have suggested would be needed for some other low-income countries in Asia. At a widely assumed poverty line for Bangladesh, the growth rate of real consumption per capita must be at least equal to the rate of population growth before the absolute numbers of poor can start to fall appreciably without a shift in relative inequalities. Such a growth rate has not been achieved in recent times, but is expected over the next 10 years or so by some observers.

* Recent growth in Bangladesh has been relatively low in a country where it needs to be relatively high to avoid an increase in the number of poor.

* Certain changes in relative inequalities could, in principle, wipe out poverty alleviation through growth. It appears that a fairly substantial change would be needed to do so for the simple headcount index of poverty in Bangladesh. However, other measures of - poverty which reflect changes in living standards of the poorest - will be more sensitive to how equitable the growth process is in the near future.

* Any poverty alleviation strategy for Bangladesh should strongly encourage domestic policy reforms and international assistance that not only enhance the rate of growth but also ensure that its benefits are shared widely.

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