Poverty reduction and governance in South Asia.

Over the past 30 years or so South Asia has made substantial progress in reducing poverty improving human development and raising its per capita income. Notwithstanding this progress South Asia remains home to an estimated 450 million poor people which is over 40% of the worlds total poor. A major concern is also that there is worrisome evidence that poverty reduction progress has considerably slowed down in the 1990s despite an acceleration in per capita income growth. Why has poverty reduction slowed down in the 1990s? What will it take to achieve more rapid and sustained progress with poverty reduction in the new millennium? The paper investigates the political economy aspects of poverty reduction in South Asia by developing a framework for measuring governance performance and relating this performance to poverty trends. The paper argues that governance appears to be a significant problem in South Asia with associated adverse implications for poverty reduction. While many of the governance concerns pre date the 1990s the magnitude of the concern and interplay of the various dimensions of weak governance seem to have magnified in the 1990s constraining the progress of poverty reduction. Accordingly a comprehensive resolution of the poverty problem will require addressing the problem of governance. Better governance in combination with other growth enhancing policies would further accelerate economic growth reduce poverty and ensure the sustainability of the growth and poverty reduction efforts in the new millennium. (authors)