Presented by

Professor Abid Burki
Professor of Economics
Director of Centre for Management and Economic Research Lahore University of Management Sciences

Abstract

This study explores how spatial variation in public sector infrastructural investments affects rural poverty under various inequality and polarization regimes. Using data from six rounds of Pakistan’s Household Income and Expenditure Survey (HIES) and 349295 observations we find that the percentage of rural people changes over time. The movement of Gini index and Wolfson’s polarization index confirm that the issues of distribution change that are missed out by the inequality index are better described by the polarization index. We find that, among other things, poverty coexists with illiteracy of household heads and lack of asset ownership. Mapping of districts clearly identifies the most developed and least developed districts, measured both by post-primary school and hospital index and road density. The evidence shows that dispersion between least developed and most developed districts is increasing with the passage of time. Increased public sector investments on education and health infrastructure are associated with decline in rural poverty throughout all but highly unequal and polarized districts: it suggests that public sector investments do not necessarily lead to welfare gains and that the returns on investments significantly differ across regions. Likewise, we find a strong negative relationship between road density and probability of poverty; however, the long run decline in poverty due to investment on roads almost doubles when we move from high-inequality/polarized and medium-inequality/polarized districts to low-inequality/polarized districts. With investment on road network, the poverty reduction potential of less polarized districts far exceeds the poverty reduction potential of less unequal districts: a further confirmation that issues of distributional change are indeed missed out by the inequality index. We conclude that public policies that seek more regional equality and less polarization are desirable for pro poor growth policies in developing countries.

When

04 July 2012
12.00pm - 1.00pm

Where

University Centre, (BLD 6_4_03)
Bond University

Contact Information

Catherine Smith
Database and Research Support
Faculty of Business
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