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Citation Information

Type Working Paper
Title Inclusive Growth in Sri Lanka
Publication (Day/Month/Year) 2011
URL http://ris.org.in/images/RIS_images/pdf/Kelegama_paper.pdf
Recently, a debate triggered consequent to a lecture by Jagdish Bhagwati on the need for
high economic growth to combat poverty and this was documented in a blog managed by
CUTS, India. In short, Bhagwati argued that high and rising growth in South Asia has
helped poverty alleviation by (i) pulling the poor up into gainful employment; and (ii)
providing larger volume of revenues without which social programmes could not be
adequately financed.
Bhagwati also pointed out that social welfare programmess are not a novel idea but had
always been a part of South Asia’s development agenda. However, they did not go very far
principally because low incomes at independence and slow growth subsequently meant
there were simply not enough revenues to carry out social programmes on a large enough
scale. Bhagwati, argued that targeted social programmes are important because they
supplement the favourable effect that the last two decades of reform-led high and rising
growth in South Asia has demonstrably had on poverty, nutrition, etc.
In this debate on growth versus social-sector spending, one point that has been
insufficiently emphasized is that additional social-sector spending may not lead to better
human development outcomes. The empirical evidence (across countries and over time)
shows a very weak connection at best.1
Despite such specific points that have been
highlighted in the literature, there generally seems to be consensus among some economists
in South Asia on this line of argument articulated by Bhagawati. But there are different
views that have been articulated that have highlighted the ‘structural injustice’ of poverty
that is not captured in Bhagwati’s line of argument.
South Asia has experimented with a number of poverty reduction strategies as advocated
by the World Bank, donor agencies, and regional institutions over the last few decades. Yet
poverty reduction has been slow and South Asia has the largest number of people under
poverty than any other region in the world. Sobhan (2010) has argued that persistent
poverty in the region derives from the unjust nature of social order which effectively
exclude the poor from equitable opportunities for participating in the development process.
He argues that unless the structural injustices which underlie poverty are removed, poverty
will persist in South Asia despite both growth and existing poverty reduction strategies
been in place.

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