Economic Premise

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The Economic Premise series summarizes good practices and key policy findings on topics related to economic policy. They are produced by the Poverty Reduction and Economic Management (PREM) Network Vice-Presidency of the World Bank.

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Now showing 1 - 6 of 6
  • Publication
    India's Spatial Development
    (World Bank, Washington, DC, 2013-09) Desmet, Klaus; Ghani, Ejaz; O'Connell, Stephen; Rossi-Hansberg, Esteban
    This note examines the recent spatial development of India. Services, and to a lesser extent manufacturing, are increasingly concentrating in high-density clusters. This stands in contrast with the United States, where in the last decades services have tended to grow fastest in medium-density locations, such as Silicon Valley. Indias experience is not common to all fast-growing developing economies. The spatial growth pattern of China looks more similar to that of the United States than to that of India. What is preventing Indias medium-density cities from growing and taking full advantage of agglomeration forces? Future research should focus on identifying the barriers to growth in medium-density places. In the last two decades, the Indian economy has been growing at unprecedented rates, but that development has led to widening spatial disparities (Ghani 2010a). While some cities, such as Hyderabad, have become major high-tech hubs with world-class companies and real estate development reminiscent of Silicon Valley, many others remain mired in poverty and stagnation. Given the huge congestion in cities such as Mumbai or Kolkata, this seems to be a reasonable policy concern in the context of India. However, those cities also benefit from important agglomeration economies, so there is a need to analyze the trade-offs between the costs and benefits of economic density before articulating policy recommendations. Such an analysis should provide valuable insights into what types of spatial and regional policy interventions may be useful and effective. Compared to other countries at similar levels of development, Indias growth stems disproportionately from its burgeoning service sector (Ghani 2010b). The evidence of agglomeration in the U.S. service sector is in cities with densities of employment below 150 employees per square kilometer, while in India, evidence of agglomeration is found in cities with densities above this threshold. In other words, if the United States is used as the efficient benchmark, then 150 employees per square kilometer is the ideal density to take advantage of agglomeration economies. In India, however, these medium-density cities are the worst places. This suggests that the costs of congestion in India are either much smaller than in the United States, the agglomeration forces are much larger than in the United States, or that there are some frictions, policies, and a general lack of infrastructure in medium-density cities that prevent them from growing faster, therefore favoring concentration in high-density areas.
  • Publication
    Promoting Shared Prosperity in South Asia
    (World Bank, Washington, DC, 2013-03) Ghani, Ejaz; Mishra, Saurabh
    The geography of poverty has changed. More than 70 percent of the world s poor live not in low-income countries, but in middle-income countries. In 2008, nearly 570 million people lived on less than US$1.25 a day in South Asia, compared to 385 million in sub-Saharan Africa. In addition, nearly 70 percent of the poor people in South Asia live in the lagging regions. Improving the living standards of these regions is crucial to achieving the goal of shared prosperity. Economic growth is not sufficient to enable the lagging regions of South Asia to catch up with the leading regions, in terms of proportional reductions in poverty rates. Policies must be specifically targeted toward achieving greater growth and poverty reduction in these regions. One particular policy channel to achieve shared prosperity is pro-poor fiscal transfers. For the most part, interstate fiscal transfers in South Asian countries do promote equity through transfer of resources to poorer regions, but this outcome usually occurs when pro-poor redistribution has explicit rules and transparency. Further, simply directing financial resources to lagging regions may not be sufficient, and may need to be complemented with increases in capacity, transparency, and participation to facilitate accountability at the local level. Policy makers need to boost shared prosperity and take another look at the millennium development goal paradigm. A new lens is needed- one that shifts the focus of policy from national to subnational level, and from leading to lagging regions, where poverty, gender disparity, and human misery are concentrated.
  • Publication
    Promoting Women's Economic Participation in India
    (World Bank, Washington, DC, 2013-02) Ghani, Ejaz; O'Connell, Stephen D.
    Despite rapid economic growth, gender disparities in women's economic participation have remained deep and persistent in India. What explains these gender disparities? Is it poor infrastructure, limited education, or the composition of the labor force and industries? Or is it deficiencies in social and business networks and a low share of incumbent female entrepreneurs? This note analyzes the spatial determinants of female entrepreneurship in India in the manufacturing and services sectors. It finds that good infrastructure and education predict higher female entry shares. Gender networks also influence women's economic participation, as strong agglomeration economies exist in both manufacturing and services. A higher female ownership among incumbent businesses within a district-industry predicts a greater share of subsequent female entrepreneurs. Moreover, higher female ownership of local businesses in related industries (similar labor needs, input-output markets) predicts greater relative female entry rates. Unlocking female empowerment and entrepreneurship is a direct path to shared prosperity and a more dynamic and sustainable growth.
  • Publication
    The Poverty Impacts of Climate Change
    (World Bank, Washington, DC, 2011-03) Skoufias, Emmanuel; Olivieri, Sergio
    Over the last century, the world has seen a sustained decline in the proportion of people living in poverty. However, there is an increasing concern that climate change could slow or possibly even reverse poverty reduction progress. Given the complexities involved in analyzing climate change impacts on poverty, different approaches can be helpful; this note surveys the results of recent research on climate change impacts on poverty.
  • Publication
    The South Asian Development Paradox : Can Social Outcomes Keep Pace with Growth?
    (World Bank, Washington, DC, 2011-03) Ghani, Ejaz
    South Asia has one of the fastest growing economies in the world, yet it is also home to the largest concentration of people living in debilitating poverty. How do the two coexist? The paradox of South Asia is that growth has been instrument in the reducing poverty rates, but poverty rates have not fallen fast enough to reduce the total number of poor people, and their remain huge room for improvement in education, health, and women's economic participation.
  • Publication
    Conflict and Development : Lessons from South Asia
    (World Bank, Washington, DC, 2010-09) Ghani, Ejaz
    South Asia is the second most violent place on earth after Iraq. Conflicts in Afghanistan and Pakistan have attracted global attention. Parts of India, Sri Lanka, and Nepal have experienced long-running conflict. Conflicts result in death, misery, social trauma, destruction of infrastructure, and have huge spillover effects. What is conflict? Where is it concentrated? Is conflict a problem for development, or a failure of development? And what should policy makers do?