Understanding the Changing East-West Divide in Bangladesh: Insights from Poverty Decomposition Analysis

Bangladesh has continued to make remarkable progress in reducing poverty since 2010. In some regards, poverty reduction has continued in a manner consistent with the previous decade. However, important differences emerge when trends are examined more closely. Poverty rates in the poorer West and ric...

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Bibliographic Details
Published in:Bangladesh development studies 2019-01, Vol.42 (2/3), p.23-73
Main Authors: Hill, Ruth, Cevallos, Jose Joaquin Endara
Format: Article
Language:English
Online Access:Get full text
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Summary:Bangladesh has continued to make remarkable progress in reducing poverty since 2010. In some regards, poverty reduction has continued in a manner consistent with the previous decade. However, important differences emerge when trends are examined more closely. Poverty rates in the poorer West and richer East converged until 2010, then diverged, as poverty reduction in the poorer Western divisions again started to lag. Poverty reduction was concentrated among those in agricultural activities until 2010, while in the more recent period it was not. This paper uses decomposition analysis to examine the changing nature of poverty reduction from 2005 to 2010 and 2010 to 2016. Why was the nature of poverty reduction so different in these two periods? Four insights emerge from the analysis: (1) Reductions in fertility and family size have been important for poverty reduction throughout the periods considered, and have been slower in the Western divisions; (2) Gains in educational attainment were key to improving household fortunes, and can help explain the divergent trajectories of the East and West; (3) Structural change is occurring, but not equally everywhere. Structural change lags in the West, where consumption remains as closely correlated with land ownership as in the past. This is concerning, given declining land holdings in the West; and (4) Special conditions were present in 2010 that increased gains to agriculture, benefiting the more agricultural West of the country and causing a temporary convergence.
ISSN:0304-095X