Poverty and the Development of Human Resources

Poverty and the Development of HumanResources: Regional Perspectives

SWP406

World Bank Staff Working Paper No. 406

July 1980

Prepared by: Willem BussinkEast Asia and Pacific Country Programs DepartmentDavid DaviesWest Africa Projects DepartmentRoger GraweSouth Asia Country Programs DepartmentBasil KavalskyEurope, Middle East and North Africa

Country Programs Department IGuy P PfeffermannLatin America and the Caribbean Regional Office

The views and interpretations in this document are those of the auth*and should not be attributed to the World Bank, to its affiliated L |organizations, or to any individual acting in their behalf.

Ihe views and interpretations in this document are those of the authors andshould not be attributed to the World Bank, to its affiliated organizations,or to any individual acting on their behalf.

WORLD BANK INTZ11NATVONAL MONlTrM.y pVUtDJOINIT LIBRAERY

Staff Working Paper No. 406

July, 1980INTERNATIONAL iBAnC PrOR

RECONSTRUCTION AND DEVELOPrMENTrAVAUNGr@rr. D1.C. 4V?.I

POVERTY AND THE DEVELOPIMENT OF HUMAN RESOURCES: REGIONAL PERSPECTIVES

A BackRround Paper for World Development Report, 1980

This paper looks at human development in five regions: East Asia, South Asia, Sub-Saharan Africa, Latin America, and the Middle East and North Africa. The treatmentvaries with the special conditions in each region and the focus selected by each author.

Bussink treats human development as one strand in a wide-ranging discussion ofissues bearing on poverty in selected East Asian countries. Davies, afterpresenting a broad overview of poverty in Sub-Saharan Africa, focuses on selectedlhuman development issues (particularly in education): these include the relationbetween higher and middle level manpower and institutional development on the onehand and the human development of the poor on the other. Grawe emphasizes questionsof population growth and the status of women in South Asia and stresses the efficiencyof education and health systems, as well as reallocation of expenditures within humandevelopment areas toward rore basic programs having a larger impact on the poor.Kavalsky also pays attention to fertility and the large but narrowing disparitybetween males and females (particularly in access to education) in the Middle Eastand North Africa. A distinctive aspect of his study is the examination of theeffect of migration on poverty. He also illustrates how human development can lagbehind natural-resource-based income growth: that is, how human and institutionaldevelopment takes considerable time even where there are no serious financialconstraints, as in some of the oil-exporting countries of the region. Pfeffermannfocuses on some educational issues in Latin America and on the more general questionof the difficulty of reaching the poorest groups with human development programs.

The views expressed in these papers are not always those of the relevant regionaldepartments of the World Bank or of the World Development Report, 1980.

Prepared by: Willem Bussink Roger GraweEast Asia and Pacific South Asia CountryCountry Programs Department Programs Department

David Davies Basil KavalskyWestern Africa Projects EMENA Country Programs

Department Department I

Guy P. PfeffermannLatin America and the Caribbean:

Office of the RegionalVice President

Copyright @ 1980The World Bank1818 H Street, N.W.Wash.ngton, D.C. 20433UI.S.A.

CONTENTS

PART I. REFLECTIONS ON SOCIOECONOMIC DEVELOPMENT AND POVERTYIN EAST ASIA, Willem C.F. Bussink ............................... . v

PART II. HUMIAN DEVELOPMENT IN SUB-SAHARAN AFRICA,David G. Davies ................................................. 53

PART III. HUMAN DEVELOPMENT IN SOUTH ASIA,Roger Grawe ................................................. .... 97

PART IV. POVERTY AND HUM5AN DEVELOPMENT IN THE MIDDLE EASTAND NORTH AFRICA, Basil G. Kavalsky ............................. 141

PART V. SOME ECONOMIC ASPECTS OF HUMAN DEVELOPMENT IN LATINAMERICA (WITH SPECIAL EMPHASIS ON EDUCATION),Guy P. Pfeffermann ... ......................... 175

PART I

REFLECTIONS ON SOCIOECONOMIC DEVELOPMENTAND POVERTY IN EAST ASIA

Prepared by: Willem C. F. Bussink, East Asia and Pacific Programs DepartmentAssisted by: Christiaan N. Grootaert, Development Research Center

Copyright @ 1980The World Bank1818 H Street, N.W.Washington, D.C. 20433, U.S.A.

The views and interpretation in this document are those of its authors andshould not be attributed to the World Bank, to its affiliated organizations,or to any individual acting in their behalf.

- vi -

Table of Contents

Page No.

Summary vii

1. Introduction and Outline 1

2. Resources and Growth 2Land Resources 3Other Natural Resources 4Population 4Resource Mobilization and Use 6Production and Income Growth 7

3. Quality of Life and Incidence of Poverty 9Quality of Life 9Poverty and Its Incidence 10

4. Aspects and Determinants of Poverty 13A Typology of Poverty 13The Life Cycle of the Poor 14Determinants of Poverty: A Framework for Analysis 16

5. Country Experiences 19Thailand: Poverty Reduction under Favorable

Land Availability 20The Philippines: Emerging Evidence of

Increasing Poverty 23Korea: Rapid Labor Absorption of Increasing

Incomes 25Malaysia: Persistent Poverty in a Fragmented

Economy 28Indonesia: Complexities of a Rapidly Growing

Poor Economy 31

6. Conclusions and Implications for Policies 34Macro and Labor Market Aspects 34Sectoral and Regional Asperts 35Basic Needs and Home Resource Aspects 36The Bank's Work and Country Relations 37Are Integrated Antipoverty Strategies Necessary? 38

Table 1. Geography and Demography 39Table 2. Investment and Public Revenues and Expenditures 40Table 3. Main Economic Development Indicators 41Table 4. Health, Education, and Facility Control 42Table 5. Comparable Poverty Lines, Incidence and Trends 43

Annex A. The Concept of Poverty and Its Limitations 44Annex B. Actual Poverty Line Estimates 49Table Bl. Country Poverty Lines, 1977 50

References 51

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Summary

Five major countries in East and Southeast Asia - Indonesia, Korea,Malaysia, the Philippines and Thailand - developed very rap-dly during the1960s and 1970s. The paper contains reflections on the role of economicgrowth and of specific policy interventions in the redressal of poverty. Itdistinguishes four major poverty groups by their place in the economy and,using the experience of the five countries over the two decades, discussesthe mechanisms through which their incomes have changed.

Broadly speaking, two factors appear to influence the position ofthe poor most fundamentally. The first is the pressure of population growthon land resources and on opportunities for employment. The second is thespeed and structure of economic growth, which largely determines theresources available for investment and consumption as well as the demand forlabor. The two countries that were most successful in reducing poverty wereThailand, where land was still available, and Korea, which had very rapid andwell-structured growth. Partly due to external circumstances, Indonesia andMalaysia were not successful in reducing poverty in the 1960s, but thesituation improved markedly in 1970. Finally, in the Philippines, where goodland was scarce and growth not well-structured, little progress was made inthe alleviation of poverty.

Considering the generally favorable international economy duringmost of the period under review, and the fact that land is now also becomingscarce in Thailand, this mixed result is no cause for complacency. To makemaximum use of further opportunities to reduce p'overty, the author urges thecountries to adopt development strategies that fully integrate poverty con-cerns into their data collection and policy formulation efforts. The Bankcould provide substantial analytical support, provided that it made theresources available.

This paper reflects several years of shared work experiences andmany discussions with Bank colleagues - in the East Asia Regional officeand elsewhere - as well as government officials. The interpretations andconclusions are however the author's own.

1. introduction and Outline

When the Bank first started to focus on poverty in the early 1970s, itemphasized that the benefits of growth were not "trickling down" to the poorand that a direct attack on poverty was necessary. Since then, it has becomeclear that Lhis approach has its own limitations and that the problem ofpoverty and its alleviations in multiEaceted.

Over the last several years, a substantial amount work has been done onpoverty in five major countries in the East and Southeast Asia: Indonesia,.Korea, Malaysia, the Philippines, and Thailand. The experiences of theselarge, economically fast-growing, and relatively successful countries deserveclose examination to see the extent to which their poor have benefited fromgrowth and the accompanying increase in public services. For, if povertypersists in those five, what can be expected of other, less-favoredcountries?

In the course of this review, it became clear that the methodology usedin the analysis of poverty is still open to many questions. Data werescarce and difficult to interpret, especially with regard to changes overtime. While some progress has been made in "counting" the poor, little isknown about their links to the economy and much less about the socioeconomicprocesses that determine whether the poor benefit or lose in the process ofeconomic growth and change. This paper contains some reflections oninterrelations between socioeconomic development and poverty in these fiveEast Asian countries and develops a framework for analysis of theseprocesses. It is hoped this discussion lays the analytical basis for theintegration of antipoverty policies into the individual countries' overalldevelopment strategies.

Because none of the five countries have followed the "welfare first"strategy as exemplified by Sri Lanka, no fundamentally different approachesto development are compared in this paper. It focuses mainly on the wayseconomic development and public policies have influenced the welfare of thepoor, not so much on the contributions of improved welfare and humanresource development to economic growth. An attempt is made, however, toindicate briefly which policy interventions in the areas of human resourceand basic needs may be vital for the welfare of the poor.

An essential area outside the scope of this is the political, culturaland institutional background to socioeconomic policy in general and to thealleviation of poverty in particular. This subject would need separatetreatment if only because of the tremendous cultural diversity between thefive countries.

There are major regional differences within two of the countries studied,between Java and the other islands in Indonesia and between Peninsular andEast Malaysia. The area which contain the bulk of the population have beengiven primary attention.

Distilling broad lessons from the many studies of poverty and relatedsubjects in East Asia has not been easy. The main sources were countrystudies in the Basic Report series, employment reports on Thailand andIndonesia, and poverty reports (some still in preparation) on Thailand,Malaysia, and the Philippines /1.

The further layout of the paper is as follows. Section 2 sets thestage for the discussion of poverty in a general socioeconomic context. Itdescribes natural and human resources and major socioeconomic developmenttrends in the five countries without attempting to explain these trends.Its main objective is to point out the macroeconomic and sectoral develop-ments that have been important for the poor. Section 3 discusses socialdevelopment and poverty and attempts to draw poverty lines that allowcomparisons between the five countries and discusses the incidences ofpoverty thus defined.

The second part of the paper reflects on the relation between socio-economic development and poverty. Section 4 distinguishes four major povertygroups, their place in the economy, and personal aspects of poverty. Itthen develops a framework for the analytical description of relationsbetween economic development and poverty, emphasizing agriculturaldevelopment and labor market mechanisms. Using that framework, Section 5presents brief analytical descriptions of the main developments in eachcountry during the 1960s and most of the 1970s /2. Finally, Section 6formulatesl the main conclusions on the matters raised in the paper and somerelated issues.

2. Resources and Growth

Our investigation of interrelationships between socioeconomic developmentand poverty begins with an analysis of the economic base. On which naturalhave the five countries been able to draw for their development? What havethe demographic developments been -- human assets as well as numbers ofmouths to feed? What manmade resources have been mobilized, and how

1. It has not been possible to incorporate systematically the informationavailable in project reports. This remains a task to be undertaken ifintegrated antipoverty strategies are to be formulated.

2. For the final years of the 1970s, data are still incomplete.

efficiently have they been used, to further growth or increase the welfareof the population directly? Finally, how fast has been growth and how hasit been structured?

Land Resources

The five countries consist mainly of islands and peninsulas skirting theEurasian Continent. Table 1 describes their physical and demographiccharacteristics. Korea, with its relatively small size and location welloutside the tropics, has geographically little in common with the other fourcountries. Malaysia, the Philippines, and Thailand are each as large inarea as the major West European countries. Indonesia's land mass is aboutthe same size as all of Western Europe, and its islands are spaced over anarea as large as the United States.

The large size of these countries does not imply that land resources areample. Four of the countries lie mainly in the tropical rain and monsoonbelt, and their soils have been leached in many places. In addition, muchof the land is either mountainous or swampy. The major fertile areas arethose where volcanic activity persists (as in Java and some other parts ofIndonesia) or where the mostly short rivers have created alluvial deposits.The carrying capacity of these soils has over time often been enhanced byirrigation, and even before the population explosion following World War II,they tended to be densely populated. This situation applies particularly toJava and Korea, where land availability per capita has become extremelysmall. Through overextension of the cultivated area erosion is occuring,especially in Java.

Where the above conditions do not apply but the climate is monsoonal,as in most of Thailand and the Philippines, soil fertility is mostlymoderate. Annual rainfed cropping is possible, albeit often with strictlimitations because of the short duration of the rainy season. Substantialamounts of land per person are necessary to provide adequate incomes. Overthe last two decades, large remaining tracts of land of this type have beendeveloped in Thailand and, to a lesser extent, also in the Philippines.Existing resources have, however, dwindled rapidly.

In the tropical rain belt of Malaysia and the main large islands ofIndonesia, leaching is so strong that annual cropping is problematic in mostareas. Traditionally shifting cultivation has often been practiced,sometimes followed by attempts to replace the original forest by more"productive" tree crops or by mixed farming under the cover of fruit andother trees. Alternatively, estates have been created by foreigners. Again,a high land-man ratio is needed and is indeed used, according to the scantand sometimes contradictory information available (Table 1) /1. However,

1. The tables begin on page 39. I suspect that land availability per headin Indonesia's "Other Islands" is larger than the figures indicate.

reserves of the better lands have fallen, and development of the poorerlands often demands substantial capital investment or outside support (as inIndonesia and Malaysia) /2. In summary, as a result of the tremendous growthin population since World War II, the land base in the five countries appearsprecarious or rapidly approaching that state. Changes in land availabilityhave major implications for poverty and its alleviation, as we shall see.

Other Natural Resources

Some of these five countries are popularly believed to be rich in naturalresources, such as minerals and forestry. Table 1 shows that, on a percapita basis and excepting petroleum, this description fits only Malaysia,which exports large amounts of tin and forestry products. In the Philippines,for example, the already modest natural-resource-based exports per capitawere halved in the 1970s.

Petroleum, one of Indonesia's traditional exports, made a net contri-bution of only about 2 percent of gross national product (GNP) to thatcountry's economy in 1970. During the 1970s, Indonesia's production expandedand then stabilized, and Malaysia became a significant producer, surpassingIndonesia more and more on a per capita basis. After costs and foreignfactor payments, about two-thirds of the price per barrel accrues to theproducer countries. By 1977, this implied per capita net production valuesof US$40-50 a year in 1977 for both countries. By 1979, given higher pricesand, in Malaysia's case, expanded production, too, the corresponding valueshad reached about $70 per capita for Indonesia and more than $100 forMalaysia. Clearly, the availability of these resources has been importantto both countries, but especially to Indonesia, with its low per capitaincome.

In contrast to the other natural-resource-based sectors, oil revenuesaccrue almost entirely to the public sector, which is not necessarily thegovernment. These revenues can therefore benefit the mass of the populationonly indirectly, to the extent that they enable government to keep taxeslow, to increase expenditures that expand employment and incomes, or toprovide additional services. Unlike petroleum exploitation, other natural-resource-based activities create at least some employment and benefit thegovernment.

Population

The five countries are ethnically and linguistically diverse, exception forKorea. All have significant Chinese minorities, largely concentrated in urban

2. This need has been enhanced by the fall in the real price of rubber (andto a smaller extent also copra) in the 1960s.

areas and identified with private business. The indigenous population'sresentment of this minority's economic power has limited government's powerto stimulate the private sector, especially in Malaysia and Indonesia.

Korea, the Philippines and Thailand had roughly equal populations ofabout 26 million each in 1960. Java alone had more than twice as many, andthe "other islands" of Indonesia had 33 million. Malaysia had 8 million. Aselsewhere in the developing world, by historical standards population growthhas been extremely rapid in recent decades, and this has had major implica-tions for poverty and its alleviation. The populations of the five countrieshave not, however, grown equally rapidly (Table 1). Between 1960 and 1977,the three "fast" growers, Malaysia, the Philippines, and Thailand, increasedtheir populations by 60-70 percent, the two "slow" growers, by less than 50percent. Basically, the rapid best differentiated growth occurred beca4seall countries but Korea had high (though toward the end declining) fertilitywhile all but Indonesia had attained low mortality.

Changes in the number of births and in the number of adolescents revealdemographic dynamics more clearly than overall population growth figures.Here, the crucial group is the one entering the labor market and reachingchildbearing age. With regard to births, fertility levels in all countrieswere high in the second half of the 1950s. Over the next decade, as Table 1shows, the entry of the small war cohorts in the reproductive age groupskept the growth in births down in Indonesia and Korea /3. In Korea, theeffect was reinforced by a drop in fertility, and the absolute number ofbirths fell. By 1977 the large cohorts of the late 1950s were enteringtheir reproductive age, but fertility had fallen substantially in allcountries, and the two effects roughly compensated each other. Recentprojections for all the countries but Indonesia point to the continuance ofthis trend so that the period of very rapid growth in each successive agecohort seems to have ended in East Asia /4. This has major short-termimplications for dependency ratios and education needs, and long-termimplications for overall population growth.

The movements in the population entering working age follow those inthe number of births by a lag of 15 to 20 years. In addition, a continuedfall in mortality increases the adult cohort size even with a constant level

3. The small growth of the number of births in Malaysia is probably relatedto out-migration by the fertile cohorts.

4. In Indonesia, the number of births is expected to continue to increaseat the (much reduced) rate of about 1 percent a year in the 1980s.

of births /5. Thus, in 1985 in all countries but Korea, the 15-19 age cohortwill be as much as 30-50 percent larger than in 1975. In Korea, the size ofthis cohort will stop growing, although the total population and labor forcewill continue to increase for another 50 years, an illustration of the longtime fertility changes need to work themselves through. The comparisonbetween Korea and the other countries in the region clearly shows thetremendous impact that its early fertility decline has had, first ondependency rates, then on the relative cost of education, and finally on thenumber of new jobs needed, factors all closely linked to the redressal ofpoverty.

Resource Mobilization and Use

Starting from a low level of development and per capita income in 1960, allcountries have made impressive progress. Table 2 shows that, compared topresent-day levels, investment rates in all countries were moderate to lowin the beginning of the 1960s. Korea's investments were fully financed by alarge resource deficit, while Malaysia ran a large resource surplus./6During the 1960s, all the countries increased their investment rates; Koreadid so spectacularly. By 1970 Korea and Thailand were investing more thana quarter of their gross domestic product (GDP), with the other countrieslagging by five to ten percentage points. During the 1970s, the lattercountries' investment rates continued to increase. The Philippines attainedthe high rate of 30 percent in 1977 /7, while Indonesia and Malaysia, thepoorest and the richest countries respectively, remained at the lower end ofthe scale.

Public revenue availability has limited the governments' ability toprovide economic and social services. Revenues were low in the early 1960s(10-13 percent of GDP) and have increased only slowly in the Philippines andThailand. In Indonesia, though boosted by large oil revenues, total public

5. Comparing two countries with life expectations at birth of 60 and 50years, respectively, the number of survivors till age 25 will be 14 percentlarger in the first country.

6. Thailand's investment rate is probably understated, as the data specifi-cally exclude substantial private investments in land development. ForMalaysia, not all the years show as large surpluses as were attained in thereference years in Table 2. It should also be noted that Malaysia'sfactor payments were relatively large at about 4 percent of GDP.

7. According to the Kravis study on purchasing power comparisons, investmentment goods are relatively expensive in the Philippines, so that the "real"investment rate, in comparison to the other countries, is lower than thefigures indicate.

revenues remain well under 20 percent of GDP. Korea has substantiallyincreased public revenues, more to replace foreign assistance than toincrease its public expenditures, which were already substantial in 1960.Malaysia, with its highly monetized economy based on extensive naturalresources and high export-to-GDP ratio, has traditionally raised substantialpublic revenues. With the recent addition of oil revenues, the Malaysianpublic sector commands more than 35 percent of GDP.

Public expenditures have generally risen with revenues. Partly financedby foreign aid (to the public sector), public spending tends to surpassrevenues by 10-30 percent (except, recently, in Korea). The three non-oilcountries now have public expenditures amounting to 16-20 percent of GDP andshow a remarkable similarity in expenditure patterns, about 4 percent of GDPfor social and economic services each. Malaysia is the exception, devotingmore than twice the average proportion of GDP allocated in the othercountries to each major category of expenditure.

Production and Income Growth

Table 3 summarizes the main data on production and incomes. Togetherwith Table 2, it shows that the relationship between investment levels andGDP-growth has been close within and between the five countries. Investmenthas accelerated simultaneously with growth instead of preceding it. Duringthe 1960s, both Thailand and Korea far out-performed the others in GDPgrowth. The Philippines and Malaysia showed lower but respectable growthrates, but Indonesia's economy suffered from mismanagement and upheaval. Inthe 1960s, however, the prices of rubber and some other primary exportsplummeted in a major structural shift, lowering real income in Malaysia and,less acutely, in Indonesia and Thailand /8. Translating from productioninto real income, Malaysia's growth was halved in per capita terms /9. Thus,in terms of growth of real incomes per capita in the 1960s, the five countriesfall into two groups: the rapid growers - Korea and Thailand - and therelatively slow growers - Indonesia, Malaysia, and the Philippines. Thefast growers outpaced the others in raising their growth rates of not onlyper capita private consumption but also of investment and public revenuesthus creating favorable conditions for further growth.

A review of the 1970-77 period along the same lines shows greatlyimproved results in Indonesia and Malaysia. Both countries reaped benefitsfrom the real price increase of petroleum as well as from their own improved

8. Table 3 traces movements in international trade and real incomes. Thesefigures should be interpreted cautiously, due to severe problems of measure-ment and weight.

9. This is just an arithmetical comparison. Of course, reduced real incomegrowth also had multiplier effects on the economy.

and more ambitious economic policies. Their growth rates for privateconsumption jumped dramatically, and their investment rates increased.Korea, the Philippines, and Thailand, though suffer from rising energyprices, increased their average rates of investment. As a result, GDPannual growth rates expanded to more than 10 percent in Korea and 6 percentin the Philippines. Korea, using accelerated growth to close its foreignresource gap, and the Philippines, using it to increase its investment ate,held their yearly growth rates of per capita consumption to the 1960s levels- 5 percent in Korea, less than 2 percent in the Philippines. Finally, the1970-77 period was less favorable for Thailand where the growth rates ofproduction, income, and consumption all declined slightly.

Before turning to the specific influences of these macro developments onthe poor, some important general factors can be brought, out. First, in allcountries and periods, production, real incomes, and consumption increasedmore rapidly than population. Nowhere, but in Indonesia in the early 1960s,were these results obtained by mortgaging the future by reducing investmentsor government services. While these similarities are important, moreimportant still are the dissimilarities, best exemplified by the largedifferentials in the growth rates of private consumption per capita. Asshown in Table 3, counting five countries over two periods, in 4 instancesout of 10 the annual growth rate of private consumption was only 1-2 percent,but in another 4 it approached or exceeded 5 percent. In the low-growthcountries, only a small lag behind average growth rates would cause theconsumption of the poor to stagnate. Conversely, in the countries with highaverage consumption growth, consumption of the poor would stagnate only ifit lagged far behind. An important question to be explored later in the paperthen becomes whether such lags are related to the growth rate and if so, how?

Put in terms of the quality of growth, this question would be: to whatextent did the pattern of growth benefit the poor? The answer lies partly insectoral emphasis. Because most poverty is rural in East Asia, as elsewhere,agriculture is an important sector. In this context, it should be noted thatthe growth rate of agricultural GDP has exceeded 4 percent a year in allcountries in both decades (with the exception of Indonesia in the 1960s).This has been a remarkable achievement. Still, the agricultural growthrates lagged well behind the overall rate of economic development. Conse-quently, unless compensated by improvements in the domestic terms of tradeor by relative movements of the population out of agriculture, agriculturalincomes would tend to fall in relation to the average. The figures in Table 3appear to confirm this /10.

10. The pattern in the Philippines deviates from the general one. Therelatively low agricultural GDP per worker in Thailand probably stems inpart from the highly seasonal nature of Thai agriculture and the consequentlyhigher than "normal" number of seasonal workers.

The manufacturing sector is important for the poor largely through itsemployment potential, as determined by its size and labor intensity.Nominally, the Philippines started with the most developed manufacturingsector (20 percent of GDP in 1960), but this share was and remains inflatedby high protection. Korea and Thailand ranked next, at 12 percent. Over theentire period 1960-77, Korea sustained the astonishing annual manufacturinggrowth rate of 17 percent. Thailand and Malaysia also showed good but slowergrowth in manufacturing. Sluggish in the 1960s, the performance ofmanufacturing in the Philippines and Indonesia also improved subsequently.

In very general terms, manufacturing's labor intensity tends to becorrelated with its export orientation. In the early 1960s, the fivecountries exported scarcely any manufactures at all. Malaysia, with thesmallest domestic market, sold manufactures abroad at the rate of $5 percapita a year; the Philippines and Korea, at the annual rate of $1. Fromthe figures in Table 3, in 1976 Korea emerges as the only country with aclear export orientation for its manufactures, followed at a great distanceby Malaysia. Despite their recent rapid growth, Thailand and the Philippinesstill exported few manufactures; Indonesia, none. These differences havehad substantial consequences for the poor.

3. Quality of Life and Incidence of Poverty

To what extent have the masses in these five East Asian countries benefitedfrom the rapid economic advances? The answer to this question can beapproached from two angles: the quality of life and the incidence ofpoverty.

Quality of Life

There is no doubt that the quality of life for broad segments of the popula-tion has improved markedly these five East Asian countries in the last twodecades. Table 4 indicates the main accomplishments in this area. Perhapsmost telling is the improvement in life expectancy by 7 to 10 years in everycountry. A life expectancy of 60 years or mDre had been reached by 1977 inall countries but Indonesia. Indonesia again excepted, their lifeexpectancies were longer than could be expected on the basis of their percapita incomes. Indonesia's lag indicates the difficulty of putting addedpetroleum revenues to work quickly to satisfy such basic needs.as healthcare. In input-oriented health indicators, such as medical personnel, Koreaand Malaysia lead the less wealthy countries, and they also have the highestlife expectancies.

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In education, primary enrollment is complete in Korea and thePhilippines, and close to it in Malaysia. Indonesia and Thailand lagsomewhat behind but even in these countries primary enrollment of girlssurpasses 80 percent. Where enrollment is less than complete, somedifferences remains between the sexes, but in comparison to other regions itis not severe. In Korea, secondary enrollment has more than tripled and isclose to universal, while in the Philippines, it surpasses 50 percent.Elsewhere, the secondary enrollment ratios have at least doubled between1960 and 1977, but they have not yet caught up with the two leaders.

Adult literacy made great strides between 1960 and 1977. Even inIndonesia, the literacy figure exceeds 60 percent. In Malaysia literacyrates are not commensurate with per capita income. In that country, the lowliteracy rate combined with the high enrollment rate for at least 15 yearsraises questions about the quality of education in the past.

The five countries have made spectacular advances in population control.From a slow start in the late 1960s or early 1970s, a state has now beenreached where between 20 percent (Indonesia and the Philippines) and 45percent (Korea) of married women use contraceptives. The birth rate perfertile woman and the total fertility rate (number of births per womancompleting her fertile period) have fallen concomitantly.. The benefits ofthis momentous change, both from a national and from an individualhousehold's point of view, have been briefly discussed in Chapter 2.

Poverty and Its Incidence

One weakness of the quality of life indicators is that they apply to thepopulation at large, so, for instance, there are no separate life expectancyestimates for less-advantaged groups in the population. Changes in thosegroups' circumstances are better reflected by trends in the incidence ofpoverty. Poverty is an income-related concept, and to the extent thatincome can be spent to satisfy many different needs, it is a good measure ofgeneral welfare. Also, since our definition of poverty is linked to thesatisfaction of dietary needs, and nutrition is a major determinant ofhealth, the poverty concept incorporates an important element of the qualityof life approach.

However, the assessment of the incidence of poverty and its trends isbeset with many conceptual and measurement problems. These are discussed insome detail in Appendix A. In summary, a few of the major problems are:

The Bank employs a poverty line concept based on caloric needs. These,however, show wide variations between persons of the same age and sex andeven for the same person at different times. Caloric needs are alsoambiguous if a person has been malnourished in the past and therefore hasnot realized his or her physical genetic potential.

* When aggregated over households, personal income and expenditureestimates, the basis for poverty lines and incidences, differ substantiallyfrom National Accounts data. Those surveys also measure household ratherthan individual incomes and even if household incomes are converted to a percapita basis, differentials in needs related to age/sex composition and sizeof the household are seldom taken into account.

* There are major difficulties in assessing differences in quality inthe different groups' consumption baskets. There is also not enoughdetailed information on rural-urban and regional price differences. Fordependable assessments of geographical variations in real incomes.

- Surveys measure incomes only over a limited discrete time period, whenthese incomes are subject to incidental, stochastic and life-cycle factors(aside from measurement errors). As a result, the surveys cannot distinguishbetween the temporarily and permanently poor, for instance /1.

* All these difficulties and potential biases are magnified whensuccessive surveys are compared to establish trends in real incomes and theincidence of poverty over time.

In view of these problems and reservations, all the works on povertyneeds to be interpreted cautiously, and to the extent possible, supplementedby other information and careful judgment. Generally, it appears that theapplication of the Bank methodology exaggerates the problem of absolutepoverty; also real income is probably distrib'uted more evenly around thepoverty line than is suggested by the survey data on per capita householdincome.

Appendix B describes and interprets work done on poverty lines in EastAsia and adjusts these lines to allow broad comparisons between countries.In Table 5, corrected poverty lines are called "formal" poverty lines becausethey are based on the Bank's formal methodology. If taken at face value,these lines would, however, denote an extraordinarily high incidence ofpoverty (43-80 percent in rural areas) everywhere but in Korea. Thispicture conflicts with life expectancy and other data. The quantitativeresults thus confirm the doubts expressed about the methodology.

At the present stage of knowledge, corrections can be based only onjudgment. In this vein, I have set "informal" poverty lines at two-thirdsthe formal ones. In my judgment, considering the available information on

1. To mitigate this distortion, instead of using income as a gauge, householdexpenditures, which are less influenced by temporary changes, could serve asa basis for assessment.

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mortality and nutrition, these informal poverty lines probably give areasonable indication of the incomes needed to avoid significant malnutri-tion. The lower poverty lines could then be interpreted as defining"definite" poverty, and people with incomes between the two poverty lineswould be in "marginal" poverty. In any case, in view of all the unansweredquestions raised earlier, these poverty lines can only be used to estimatepoverty at the national level, not to identify individual poverty households.

Given a poverty line, two factors determine the overall incidence ofpoverty in a' country. The first is the per capita availability of consumergoods, in relation to the amount indicated by the poverty line. The secondis the division of these goods among consumers. Table 5 indicates theratio between the (informal) poverty lines and the level of per capitaconsumption. Since this indicator does not reflect differences in theavailability of consumer goods between urban and rural areas, it cannot beused for urban-rural comparisons within countries. Comparing the ruralsituations between the countries, the relation between the incidence ofpoverty and the availability of consumer goods seems close, with countrieswhere land has been available (Thailand and Indonesia's other islands) havinga low incidence of poverty. The single exception to the relation between theavailability of consumer goods and the incidence of poverty in rural areasis Korea, where the second factor equality of incomes plays an importantrole /2. Comparing urban areas in the various countries, the incidence ofpoverty appears to be even more clearly related to overall affluence interms of the availability of consumer goods than was the case in ruralareas.

Comparing incidences of poverty across countries, Java is in the worstpoverty situation of the five countries. Second come the Philippines, which,according to these figures, have a more severe poverty problem thanIndonesia's other islands. On average, the rural areas in Indonesia's otherislands appear to be better-off than Malaysia, but this is partly due towide variations in affluence within these large islands. At first somewhatsurprising but understandable in view of its low food prices, Thailand'sincidence of poverty is lowest of the four southern countries. Finally,Korea, according to the not very reliable figures presented here (which do,however, seem to conform with general impressions) has done well in ruralareas but less well in cities.

2. The data on poverty incidence in Korea, based as they are on a householdincome distribution, are however particularly suspect.

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For reasons explained earlier in this section, poverty trends are moreelusive than poverty levels. The Bank's broad assessments in various reportsare also summarized in Table 5. During the 1960s, only Korea and Thailandseem to have made progress in alleviating poverty, but in the 1970s all butthe Philippines did. The countries and periods in which no headway was madeagainst poverty are the same ones in which growth in per capita income andconsumption were very limited (Table 3). Thus, as elsewhere, it appears tohave been difficult in East Asia to ameliorate the situation of the poorunless the economy grew rapidly.

4. Aspects and Determinants of Poverty

Poverty thus persists in East Asia despite the unquestionable economic andsocial gains of the past two decades. In the next two sections, an attemptis made to identify the main groups of people living in poverty and todevelop a framework for the analysis of the existence and persistence ofpoverty. This framework is then applied to each of the five countries.

A Typology of Poverty

Four major poverty groups can be distinguished. With urbanization limitedin all the countries but Korea, the two main poverty groups live in ruralareas. The first group consists of people cultivating poor, rainfed soils,most but not all of them practicing subsistence agriculture. In the initialstages of settlement, such land is not scarce, and labor is the limitingfactor in the peak season, which is often brief. This type of povertyis usually regional in character: most people of the area are poor, andtheir incomes do not show wide variation. Because most of these areas aresparsely populated, economic and social infrastructure are expensive.

Experience in Thailand and elsewhere suggests that "opening up" suchareas (especially by building roads), while costly, may break the povertycycle. However, increased population pressure in areas with poorersoils (Southern Java, parts of the Philippines, East Malaysia) can lead toextreme deprivation. Even without such pressures, many Malaysians andIndonesians who raised traditional crops of rubber and coconut on poor landwere caught without resources to modernize after the collapse of worldprices for these commodities. A smaller number of Thais and Filipinoswere similarly hurt. Any productivity increases wrested from such lands oron more fertile soil are generally eroded by population increases. Areasrecently improved are therefore usually better-off.

The second large group of rural poor is found in "old" developed areas,often irrigated, where population pressure has caught up with resources(much of rural Java, for example). Here, physical and social infrastructureis fairly complete; income, rather than access, limits its use. The higher

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population density supports activities outside agriculture, and some localmultiplier effects occur. There may be work opportunities for everyone, butlabor is too plentiful, and labor incomes are low. Displacement oftraditional labor-intensive activities exacerbates this situation. Ifcombined with significant problem of landlessness or tenancy, widespreadpoverty then occurs among people dependent largely or solely on laborincomes.

A third poverty group is the urban one. As elsewhere, populationpressures in rural areas have spilled over into the cities of East Asia.The usual push-pull factors are involved, together with complex labor marketmechanisms. The high cost of living in some cities may discourage in-migra-tion. In Jakarta, for example, transportation is costly and water has to bepurchased from a water carrier. In other cases, open land frontiers, asin Thailand, may reduce the tendency to urbanize.

The fourth and especially vulnerable poverty group consists of peoplewhose participation in the productive process is limited: the disabled andthe aged. While the exended family in traditional societies usually takescare of the old, this group may become more isolated as a result of socialchanges accompanying economic development. As successful socioeconomicdevelopment eliminates other groups of poor, poverty tends to concentrate ingroups of the old and disabled. There are signs that this has beenoccurring in Korea, the most advanced country of the five. Economicdevelopment will do little to help these hard-core poor who must look tospecial government programs for support.

The Life Cycle of the Poor

Poverty households contain an above-average number of children; as aresult the incidence of poverty is higher for children than for adults A.This relation, which has also been established in East Asia, remains valideven if average per capita household incomes are calculated on an adult-equivalent basis. Furthermore, the distribution of consumption items(especially food) within the household, tends to be biased against children(and in favor of adult males). Thus, children are almost invariablymalnourished in poverty households. Disease and parasites aggravate theirplight. Nutritional surveys in the East Asian countries confirm theseimpressions.

1. During the early phase of a country's reduction in fertility, fertilitydifferences between the poor and nonpoor may be exacerbated. However,contraception in most East Asian countries is now so widespread that itprobably also extends to the poor.

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While countrywide infant and child mortality rates are down, it is likelythat they are still relatively high among the poor. On a regional basis,poverty and mortality go hand-in-hand. Put bluntly, a Mlalthusian populationadjustment mechanism seems still to be at work among the poor. A poor infantwho survives its first year faces an arduous childhood and th- possibilitythat its physical and perhaps its mental capabilities will be impaired.

In East Asia, the sex of a child, while determining most of his orher role in life, will not be too much of a direct basis for discrimination.Irrespective of sex, access to school may, however, be a problem for childrenin poor agricultural areas. Moreover, for the first poverty group living inthese areas, where labor often is scarce, the opportunity cost of keepingchildren in school can be high. These opportunity costs are probably lowerfor the other poverty groups and in the usual labor-surplus conditions wherethey live, may be exceeded by the private returns on education. On groundsof access as well as demand for education (perhaps also because of qualitydifferences), poor children in more densely populated rural areas and citiesprobably have a better chance of receiving an education than do those inless-developed rural areas.

Poor parents must generally make substantial sacrifices in out-of-pocketand opportunity costs to put their children through school. One study, forMalaysia, /2 showed out-of-pocket expenses for a primary school child to be9 percent of household income in the poorest quintile;/3 for a secondaryschool child, the percentage was twice as high. Poverty households investingin education (often for several children simultaneously) have to curtailseverely expenditures on other basic items. This is likely to affect chil-dren most, to the possible detriment of their learning ability. Unless thepublic sector helps to bear the cost of education, poor children will thenbe caught in a no-win situation and will end up with little education.Considering the well-established link between education and income in adultlife such a handicap contributes to the transmission of poverty fromgeneration to generation.

As the child grows up but remains at home, the household's number ofpotential earners increases, and its income may improve, especially in anenvironment where labor is short. In a severe labor-surplus environment.

2. J. Meerman, Public Expenditure in Malaysia: Who Benefits and Why,(Oxford, 1979).

3. These were slightly compensated by public aid.

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however, where many youngsters enter the labor market, competition for workmay be fierce and the return low. The incentive for a young adult to leavesuch an area will be strong, but much depends on perceived opportunitieselsewhere. Here, sex becomes an important determinant because it is moredifficult for girls to start out on their own. The situation at home alsoremains important: if the parents own some land on which returns haverecently increased through irrigation or new technology, the household maydecide to absorb another member permanently spreading the work among thefamily./4

The next generation repeats this pattern. The land may be subdividedfurther and further, especially under Muslim inheritance laws in Malaysiaand parts of Indonesia. Even if the land the family initially had continuesto be farmed as a unit, problems of management often arise. Divorce ordeath may break up households. Female-headed households usually show lowincomes, but their average size is also smaller and poverty no worse thanfor the average household./5 In old age, much depends on the continuedexistence of traditional support systems. When younger family members,seeking a better life, move away from the impoverished countryside, theirlittle-educated, old relatives may face a bleak 'old age. This is happeningin parts of Malaysia, for instance.

Determinants of Poverty: A Framework for Analysis

In light of all these factors and the country experiences described in thenext section, what are the main determinants of poverty in East Asia?Much of what has been has a clear Malthusian ring -- and indeeddevelopments in the past two decades reflect the pressure on resourcescaused by the unprecedented growth in population and in the labor force.With regard to the future, while the growth in the annual number of birthshas already decelerated or even stopped (Table 1), and dependency rates arestarting to decline, the growth in the working-age population will not abatemuch in the next decade. In a simple and perhaps simplistic view, thisabundance of labor will, if all other factors remain constant, depress laborincomes to the disadvantage of the labor-dependent poor.

A second aspect of poverty in East Asia is its largely rural andagricultural character, until economic development is considerably advancedas in Korea. In large and complex agricultural sectors, such as those inthe major East Asian countries, technology, prices, and cropping patterns

4. Geertz has described the "agricultural involution" in Java.

5. This situation may already reflects a poverty-adjustment mechanism,whereby someone other than the single parent takes care of children.

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undergo constant change, changes that often influence incomes and povertymore in the short and medium term than do the longer term demographicfactors. But eventually, demographic influences assert themselves constantlyand inexorably, unless offset by other powerful influences, such as theabsorption of workers outside agriculture. Thus, demographic pressure,farm income, and demand for labor weave a complex web of trends that haveto be untangled if basic factors and relations that entrap major segments ofthe population in poverty are to be understood.

A growing population can be absorbed relatively easily if. new land asgood as the marginal land already under cultivation can be developed easily,without large private investments or government support. As long astechnology and prices in the original marginal agricultural activity remainstatic, and this activity initially occupied many people, such lateralexpansion will occur at roughly constant incomes for the marginal groups inagriculture. As indicated by experience in Thailand, the incidence ofpoverty in agriculture may still decline significantly under theseconditions, as some areas or groups (including possibly those in the newlydeveloped areas) benefit from government programs, improved technology orprices, or the opening of markets for new crops. In most cases, suchbeneftits; are not netitralized quickly by permanent rural migration, thoughthey tend to wither away gradually by differential rural-urban migration, aspoverty pushes fewer people out of these more affluent areas.

In these circumstances, a well-functioning labor market with an elasticsupply of labor from the large marginal group in agriculture will keepunskilled wages down throughout the country and will also moderate rural-urban migration. As long as nonagricultural labor absorption remains smallin relation to the size of the marginal agricultural group, its influence onthe labor market and on labor incomes of the marginal groups will remainlimited. On the other hand, any increase in the incomes of the largemarginal group in agriculture will rapidly influence labor incomes in othergroups and sectors, including urban ones.

The "easy" situation of an ample supply of at least moderatelyproductive land has existed mainly in Thailand, but even there the landresources have been dwindling rapidly. Where such land is not available,the determinants of poverty become much more complicated, because there isno basic "floor" under poverty incomes. In agriculture, applying more laborto the same land base (or bringing less-fertile land under cultivation)drives down returns on labor and increases those on (old) land./6 Theselong-term factors are intertwined with regional and product-specific changes

6. Apart from any direct effect this may have on the distribution ofincome, it will increase the incentive to distinguish ownership fromcultivatorship of the land.

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in production technology and prices, which always occur. Some of thesechanges may directly influence the demand for labor. Others may, throughincome change, modify the tendency of the growing household labor force tostay on the farm rather than try its luck elsewhere. In other words,income increases in specific agricultural households, even if they are notpoor, may influence the net supply of labor from these households to theeconomy and, through that process, marginal labor incomes and the situationof the poor.

Unless employment and incomes on already cultivated land increaserapidly, the effect of dwindling land availability will be that many moreworkers enter the nonagricultural'labor market. The all-important questionfor the poor then becomes: What level of labor incomes can they obtain inthe market?

Information about labor markets and their functioning has generallybeen scant, and its analysis difficult. With some important exceptions,notably Malaysia, labor markets appear to have worked well in the East Asiaregion. Conceptually, job creation can be divided into primary, secondary,and residual categories.j7 Primary jobs can be defined as those created byovercoming supply constraints (mainly through investment)./8 Secondary jobsare spinoffs from primary ones through interindustry and demand effects(employment multipliers). Residual jobs are those that emerge to balancethe labor market, since the poor cannot afford to be unemployed./9. As longas this residual is positive, it tends to drive down labor incomes. Thetrouble with this conceptual categorization of jobs is that statisticalinformation on employment always is ex post, and therefore includes theresidual category. Unless this category can be isolated, information on"Jobs created" is therefore not necessarily useful for analyzing labormarket trends. In fact, a rapid increase in employment may mean that thepoor have to work harder to make ends meet.

Since it is so difficult to determine employment trends ex ante, thesituation on the labor market has generally been deduced from trends in realwages, rather than the other way around. However, information also tends tobe scant on unskilled wages in general, on those in the traditional sector

7. In this discussion, jobs include self-employment. The discussion refersmainly to the informal sector, where most of the employment is at present.

8. This category should be net of negative effects on jobs elsewhere,especially in the traditional sector.

9. In East Asia, as elsewhere, unemployment appears to be concenrated amongsecondary earners in nonpoverty households.

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in particular, and on movements in prices paid by the poor. As a result,real trends for the lowest wages have been difficult to establish. The workon labor markets and wages in East Asian countries has therefore consistedmainly of attempts to fit various pieces of circumstantial evidence into aplausible pattern. Much remains to be done in this area.

Finally, how does the labor market link back to the dynamics ofpoverty? Much of the agricultural development in already cultivated areashas occurred through (increased) irrigation or technological changes in manycases enhanced by improved agricultural terms of trade in the last decade.While most of the direct benefits may have gone to the owners or cultivatorsof the land, other groups have benefited from multiplier effects. Theselocal (and probably also total) multipliers could have been higher had ruralindustrialization been more successful (as in Taiwan). In all countries,except to some extent in Korea, manufacturing development, however,clustered in or around large cities. Many jobs were created in exportmanufacturing in Korea, appreciable numbers in Malaysia, and much smallerones (in relation to the size of the economy) in Thailand and thePhilippines (Table 3, last line). The multiplier effects were no doubtsubstantial, as were those of natural resource-financed increases in publicexpenditures in Indonesia and Malaysia. Rainfed areas, where technologyprogressed slowly if at all and few multiplier effects developed oftenlagged behind. Where the population in these areas or in those with highinitial population pressures constituted a significant part of the total,the labor market had difficulty in absorbing the overflow, with adverseconsequences for the poor throughout the economy (as in the Philippines).On the other hand, where both agricultural and industrial developmentsucceeded (as in Korea) the creation of primary and secondary jobs outpacedthe growth in the labor force, labor incomes rose throughout the economy,and poverty was significantly reduced.

5. Country Experiences

Against the background of the preceding discussion, the principal determi-nants of poverty levels and trends in each of the five countries are discussedin this section. To concentrate on essentials, much enlightening detail mustbe eliminated. Readers in search of more complete material should consult themain sources mentioned in the bibliography. In addition, most of the dataon poverty and its incidence are now some four years old, and since thentrends may have changed. The purpose of this paper is, however, not so muchto assess comparative performances in the alleviation of poverty but ratherto reflect on the policies and processes that may have amelioratedor aggravated poverty. This should help in formulating more integrated,concrete strategies to deal with poverty in different countries according totheir own country-specific constraints.

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Thailand: Poverty Reduction under Favorable Land Availability

Thailand is one of the few food-exporting developing countries. Itremains primarily a country of farmers. In 1977 three-quarters of Thaiworkers were still engaged in agriculture. But this sector producedonly 28 percent of total value added that year. One important damper onagricultural incomes has been the export tax on rice which has, however,also kept domestic food prices low and in that sense has helped the poor.Until recently, to protect domestic industry, fertilizer prices have beenhigh; this has adversely influenced the level of inputs and technicalsophistication of agriculture. These adverse factors have been largelyoffset by the ready availability of land. Since 1960 the area underholdings has grown 4 percent a year and average farm size has expanded. Butthis favorable situation is now rapidly ending.

Stimulated by active private trading in agricultural products and by alarge public road-building program, Thai agriculture has not only expandedgeographically but has also diversified tremendously in the last twodecades. Rubber, kenaf, maize, cassava, and sugar have become major crops,in addition to the traditional rice. Except for rubber and cassava, theagricultural terms of trade improved, partly as a result of a reduction inthe export tax on rice. Between 1962 and 1976, the average agriculturalhousehold's real income is estimated to have increased by 60 percent; athird of this gain resulted from improved terms of trade.

Among the 12 subregional "typical" agricultural households distinguishedin the Bank's 1978 Basic Report, levels of income and changes therein havevaried widely. The main causes of this variation were the levels of initialincomes, opportunities for cultivating new land and new crops, the extent ofwater control, and prices. Four of these typical households, in regionsaccounting for 43 percent of all households, had household incomes of lessthan US$500 a year in 1976, an average per capita income of less than $100.The other typical household groups all had average incomes above $600, andthose located on the east and west of the Central Plains, which grow mainlyupland crops commercially and account for 9 percent of all agriculturalhouseholds, even had incomes above $1,000. Despite this regional diversity,one pattern is clear: the closer a province is to Bangkok, the higher is itsper capita income.

While there is in each (sub)region a considerable variation incharacteristics around the "typical" farm, the favorable land availabilityhas prevented the emergence of a class of very small farmers. Typically,also, those cultivating less land have higher off-farm incomes. Neither istenancy a pervasive problem. Thus, poverty is largely concentrated in areasof low agricultural income and, within those areas, in households havinglow skills and high dependency ratios. Of the 43 percent of farm householdsmentioned above which "typically" had per capita incomes below $100 in 1976

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(compared to an informal poverty line of $82), two-thirds live in the upperand lower Northeast. Most of them grow rice under unfavorable soil andclimatic conditions, have poor access to services and markets, and uncertaintitles to their land. The other large group of farmers with low-incomeincreases over the last 15 years and currently low-income levels lives inthe upper North, outside the irrigated areas, where the land-man ratio isunfavorable. Few technological packages have yet been developed orintroduced to those farmers, and unlike farmers in other areas they stillgrow largely the same crops under the same conditions as their fathers did.

Because price indices by income group and rural region are notavailable, trends in rural poverty are difficult to assess. From allavailable information -- including national and regional accounts,expenditure surveys, and work on the regional typology of farmers -- theincidence of rural poverty appears to have been reduced significantly,probably by as much as 40 percent. The exceptions were some of the poorestgroups of farmers in the North and Northeast.

The labor market picture has been dominated by the absorption oflabor on newly cultivated land. In the 1960s and 1970s, agriculture absorbed60-65 percent of the additional workers without a drop in marginal realagricultural incomes.L1 With the other sectors only providing modest, thoughgradually increasing, opportunities for employment, and given relativelywell functioning labor markets, the marginal returns to labor in agricultureseem to be the main determinants of wage levels throughout the economy,after allowing for the costs of migration. The crucial and largest agricul-tural area is the Northeast. There, real wage rates have stagnated since1960, causing stagnation of unskilled laborers' real wages and self-employedworkers' real incomes in the nonagricultural sectors of the rest of theeconomy (including Bangkok).

In other rural areas, especially in the double-cropped parts of theCentral Plains and the North, real wages increased in the 1970s after adecade of stagnation. This gain can be explained by the tigntness of locallabor markets during seasonal peaks and by the relatively high costs ofshort-term movements of labor over long distances.

In 1976-77 agricultural wages in the Northeast were in the range ofUS$0.60 to $1.00 a day, depending on the season and type of work.L2 In

1. In fact, incomes in some of the newly developed areas were higher thanelsewhere. There were no indications that agriculture was absorbing residuallabor (as defined in the previous section).

2. By comparison, a poor farmer's annual income, divided by 250 working daysin the year, was less than $0.50.

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the Northern and Central regions they were 25 percent and 50 percent higher,respectively. Nonagricultural wages were $1.30 to $1.50 a day. Consideringthat these wages were paid mainly in urban areas where the poverty line ismuch higher, they were only moderately higher in real terms than agriculturalwages in the Northeast./3 At the lowest of these rates, an urban workerwould have to be employed 250 days a year to support one other person at theformal poverty line (Table 5). At the lower informal poverty line, twopersons could be supported. In a normal household of five to six personsfully dependent on incomes from unskilled labor, at least two members and,under less favorable conditions or assumptions, three members must work tokeep the household out of poverty. At higher skill levels, the need foremployment diminishes: in Bangkok in 1975, for example, a mechanic earned1.75 times the wage of an unskilled worker in manufacturing.

Because of the high participation rates of the less affluent in urbanareas, and the absence of labor market pressure from rural areas, theinciden'ce of urban poverty has been low. Stagnating real wages have,however, left the incidence of poverty almost unchanged since the late 1960s.Whatever improvement has occurred has come from an upgrading of the laborforce.

Public policy in Thailand has generally not favored the poor. Accordingto Bank estimates, until 1972 the direct incidence of Thailand's overall taxsystem was roughly proportional to incomes. So was its expenditure. Govern-ment expenditures per capita per province have been positively correlatedwith provincial per capita incomes, which are in turn correlated withproximity to Bangkok. This pattern of expenditures is reflected in thegeographical distribution of public services. Education, for instance, haslagged in the North and Northeast. This has important long-term implicationsfor these poor regions, since it has been shown that education beyond fouryears is clearly related to output by Thailand's rice farmers, and infantmortality in rural areas is correlated with the education of the mother.Health care facilities are also unevenly distributed. The government hasstarted a program to improve rural facilities below the provincial level,which suffer from underutilization.

Family planning has progressed rapidly. By 1975 45 percent of fertilecouples were using contraceptives in the North and Central Regions, 30 percentin the Northeast, 18 percent in the (Muslim) South, and 50 percent inBangkok. Provincial differences in fertility'reduction and use of contra-ceptives appear in some instances to be related to land scarcity, with

3. The diLference probably exceeds the cost of migration and thereforemay also reflect some skill differential between marginal urban and ruraljobs.

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fertility lowest in the land-hungry upper North. The reduction in fertilityhas started to influence the outlook for population growth substantially.In view of Thailand's dwindling land resources, this significantly increasesthe opportunities for a continued reduction in the incidence of poverty inthe future.

The Philippines: EmerRinR Evidence of Increasing Poverty

While the Philippines and Thailand are at a comparable stage ofeconomic development, the land frontier has been closed over much of thePhilippines for some time. Partly as a result of this, the Philippineeconomy has been growing somewhat more slowly (Table 3). In view also ofthe rather capital-intensive character of the Philippines' industrialdevelopment, it has been difficult to absorb the large additions to thelabor force. As a result, over the decade 1965-75, real labor incomes havebeen dropping, and the incidence of poverty has been increasing.

There are several signs that labor demand and supply have been balancedonly with the help of residual job creation (as defined in Section 4).Migration appears to be substantially related to the availability of land.In important parts of the service sector, labor absorption has grown fasterthan production, and overall productivity has fallen. The decline in laborparticipation rates among the young seems greater than can be explained by-the increase in educational enrollment. Most importantly, it appears that,starting in the 1960s, real wages declined in both urban and rural areas, inevery region and in nearly every occupation./4

Occupational mobility in the labor force appears substantial,especially in rural areas. As a result, agricutural wages seem to differlittle from the marginal return to labor working on the family farm. Becauseof the scarcity of land, there are, however, problems of landlessness andtenancy. Also, many farmer-owners hold only limited amounts of land, andthe incidence of poverty among them is not much lower than among tenants orfarm latorers. While agricultural growth has not been much slower than inThailand, its benefits have largely accrued to a limited number of existingland owners.

4. This finding, as well as the one indicating an increasing incidence ofpoverty, of course depend on the price deflator chosen. While there is asyet no indication that this deflator is too high, price data are few and maynot be fully dependable.

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In 1975 agricultural wage rates in most regions were around US$0.80a day, only about twice the level of the informal poverty line, assuming 250working days per year./5 Under those circumstances, the incidence of ruralpoverty had' to be high. In Manila and suburbs,, the average daily unskilledwage rate in industry was about $1.90 in 1977. Because of the much higher.cost of living there (about 35 percent above the average for urban areas,indicated in the poverty lines of Table 5), /6 this net wage was in realterms only moderately higher than in rural areas. Some special area studiesshow significantly lower incomes in the urban traditional sector. Thus, theincidence of poverty cannot be much lower in urban areas than in ruralareas. Indeed, the data in Table 5 show that urban poverty, which used tobe lower, has nearly caught up with rural poverty.

The information on trends in real labor incomes and in the incidence ofpoverty, while not easy to interpret, seems to be consistent. The real wagerates of agricultural workers and of unskilled workers in Manila havefollowed a downward trend since 1960, with fairly significant fluctuationsin between (especially a recovery in the late 19609). Skilled labor wagesin Manila dropped much more than those of the unskilled, indicating anespecially unfavorable labor market for skilled workers as well as reducedreturns on education. The marked decline in real wages in 1972-74, and asubsequent recovery in real wages in agriculture (but not in urban areas)are, however, not easily explained with reference to long-term developmentson the labor market./7 These fluctuations may have been related to rapidlyaccelerating inflation and lagging nominal wages. Such an explanationappears more relevant to wages in the fonmal sector than to the overalllevel of labor incomes, where the informal sector has a large weight (thestatistics may largely reflect formal wages).

With regard to trends in the incidence of poverty, major technicalproblems arise in comparing the various surveys, especially those before1965. For whatever they Are worth, the comparisons show a significantreduction in the incidence of poverty between 1957 and 1965 (perhaps mainly

5. For this comparison, wages were inflated to the 1977 level by theconsumer price index.

6. This large cost difference within the urban grouping shows how crudepoverty estimates are that do not reflect such differences.

7. In his contribution to the Philippine Poverty Report, D. Lal hassuggested that these short-term fluctuations can be explained by relativemovements in the prices of various end products (produced with differinglabor intensity) which in turn have largely been caused by changes ingovernment policy.

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along the lines experienced in Thailand), a roughly constant incidencebetween 1965 and 1971, and a large deterioration between 1971 and 1975. Theextent of poverty in 1975 is probably exaggerated by a significant undercountof expenditures in that year, and incidental factors may also have con-tributed to the increase in poverty. All other evidence, including that onwages, confirms that a deterioration did indeed occur, especially in urbanareas.

Other data also indicate that poverty is a serious problem in thePhilippines. Nutrition surveys show that malnutrition among children wasworse in 1976 than in 1958-67, on average. While life expectancy is high,/8so is infant mortality,/9 and the combination of the two is consistent withthe existence of poverty.

Most health care facilities are run by the private sector, and theirhigh cost limits access to the poor. There are large disparities in thelevels of services between urban and rural areas. Government expendituresin the health sector, with relatively heavy emphasis on curative services,amount to less than 0.6 percent of GNP.

In education, the Philippines compare well with other developingcountries, and even with some developed ones. Primary education, which isfree, shows full enrollment, but dropout rates are high, especially in poorrural areas. The private sector plays a large role in secondary and highereducation; fees are charged and subsidies to the rich for these types ofeducation are lower than in many other countries. Because of the Philippines'high level of secondary and tertiary education and the slow growth of modernsector employment, social and private returns on education have probablydeclined to low levels.

Korea: Rapid Labor Absorption at Increasing Incomes

Korea's "success story" has been documented in many studies, both inside andoutside the Bank. Part of the reason lies in Korea's wealth of statistics.But, these data are often incomplete or contradictory. It has recently beenshown, for instance, that when gaps in coverage are taken into account, theKorean income distribution, though good by international comparison, issignificantly less equal than had generally been believed./10 The information

8. It does not appear to have improved much since the late 1960s.

9. In 1975 children under the age of 10 accounted for 40 percent of alldeaths, and about half of these were of infants under one year of age.

10. See S. Bhalla: "The Distribution of Income in Korea: A Critique anda Reassessment" 1979.

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on prices is also weak. Various price indices show quite different rates ofinflation, and this makes the assessment of trends in real income difficult.One fact is certain: in Korea, itnlike the other countries, the growth rateof the working age population has recently peaked and is gradually slowing.

Korea ran out of arable land a long time ago. The little land there iswas redistributed soon after World War II, and since then rules on maximumownership have been strictly enforced. Unlike the Philippines, economicgrowth and labor absorption have been high outside agriculture. Korea'smanufacturing sector (especially its exports:) contributed heavily to Koreandevelopment. In 1964-68, the takeoff period, nearly half of new employmentwas created in industry; in 1972-77, more than half. The intervening years1968-72, when many workers were absorbed into agriculture, were a time notonly of less buoyant industrial growth but also of strong improvements inthe agricultural terms of trade.

There is strong evidence that, contrary to developments in thePhilippines, the labor market has been tightening in Korea. Productivityhas risen rapidly not only in industry but also in the services sector,which in a situation of land scarcity may easily become a reservoir ofresidual employment. The participation rate has been rising, especiallyamong secondary earners. While direct statistical information on real laborincomes is problematic, there can be no doubt that real labor incomes haveincreased substantially,. if only because they could not possibly have beenat their current level two decades ago, given Korea's low level of nationalincome at that time.

Compared with the other four countries, Korean labor incomes areconsiderably higher, even if they are discounted by differences in povertylines. In Korea's closely knit economy, with its well-functioning labormarkets, the differences between nominal urban and rural wages are small;differences in wages appear to be related mainly to sex. The averageunskilled daily wage rate in agriculture and manufacturing (for long hours)in 1977 was more than US$4 for males and more than $3 for females. Farmincome per worker was about the same; income per worker in the servicesector somewhat lower. Of course, many workers earned less than the average.An estimated 6 percent of male and 20 percent of female workers earned lessthan $2.40 a day in 1977. Even that amount is, however, three times theformal and 4.5 times the informal poverty line income in rural areas. Forthe urban areas, these ratios and therefore the ability to supportdependents were somewhat lower, 2.5 and nearly 4, respectively. This, andthe lower female participation rate, explains the higher poverty incidencein urban areas. These favorable ratios between labor incomes and the costof living at the poverty line, together with high and increasingparticipation rates (notwithstanding increased educational enrollment),

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rapidly dropping dependency ratios,/11 and a relatively even distribution ofincome in rural areas make for a low incidence of poverty in Korea. Povertyis probably confined mainly to the handicapped and households with a highdependency ratio.

The available figures on trends in the incidence of poverty suffer fromuncertainty about the deflator which should be used. In addition, data onincome distribution are available only on a household basis rather than on aper capita household one. Some estimates that indicate the incidence ofpoverty to have been reduced by up to two-thirds from 1965 to 1977 appearplausible. The picture with regard to real labor income points in thedirection of large gains in the early period of rapid growth in industrialemployment (1964-68), continued increases in the period of renewed absorptionof labor into agriculture under the influence of improved terms of trade(1968-72), but slower growth thereafter until 1977-78 boom. The slackeningof labor income growth in 1972-77 may have hbt-n par -.y .lated to theextremely rapid expansion of the labor force in those years (4 percent ayear).

Apart from its overall economic and growth policy, which had a profoundpositive influence on the alleviation of poverty, the government alsodirectly influenced incomes and their distribution. While the tax systemappears to be regressive in urban areaAs and only mildly progressive in ruralareas, public expendititr'-.'4 t ag !.istributive effect in that the poorbenefit more than the rich in relation to their incomes (though not inabsolute amounts). The earlier land reform and the later support system forfoodgrain prices have also been of great significance. While the food pricesupports have raised Korea's domestic food prices well above internationallevels, their direct effect on the real incomes of poor consumers has been-itigated by subsidies, especially on "poor-men's foods" such as barley.The food price policies have no doubt increased incomes in the (generallypoorer) rural areas. Their indirect effect has been to keep more people onthe farm and therefore reduce the pressure on the labor market, thereby alsobenefiting the poor.

Compared with many developing countries, Korea's social developmentexpenditures have been 'nol- Ei relation to GNP. Nevertheless, the rapidincreases in privatet teid in absolute expenditures for socialdevelopment that accompanied fast economic growth have enabled improvementsin health, high levels of educational attainment, and good access to basicservices. The rural development program has been particularly successful inimproving the quality of rural life.

11. Because of the steep dro) hi. fertility, the population of working ageincreased from 54% of the total in 1960 to 60% in 1978.

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Despite this progress, a number of problems persist. Health servicesare less accessible in rural than in urban areas, the cost of hospitalizationis beyond the reach of many Koreans, and there are emerging problems ofcrowding and pollution. Primary education, though compulsory, is not yet

eill charges. In middle and high schools, fees and other costs put aheavy burden on poor families.

One of Korea's most successful efforts' has been in population control.The proportion of married women of reproductive age practicing contraceptionincreased from 9 percent to 44 percent from 1964 to 1976. A similar increaseoccurred in the proportion of women who had "ever had" an abortion. As aresult, the total fertil.Liy rai: ,Ll which was over six in the late 1950s,was approximately halved 20 years later. In recent years, the governmenthas greatly stepped up its investments in the social sectors. If Koreafulfills current expectations and reaches developed-country income levels inlittle more than a decade, social services must be greatly improved ifsocial development is not to lag substantially behind economic development.

1Malaysia: Persistent Poverty in a Fraamented Economy

For so small a country, Malaysia distinguishes itself by its internaldiversity. Not only are Peninsular /13 and East Malaysia much different,b'ut the East and West sides of Peninsular Malaysia are also differert.There is great ethnic diversity. The numerically dominant Malays are largelyidentified with smallholder agriculture; the Chinese with the "modern"sector in the cities, and the Indians with the estates and some professions.Within the government, the states are vested with strong prerogatives,especially in their access to land.

The economy reflects all these divisions in a high degree of income in-equality and in segmented labor markets. As a result of this fragmentationand the large real price decline in the 1960s of rubber, its majorexport product, Malaysia suffers from a high degree of poverty relative toits available resources and its level of per capita income.

Aside from its fragmented economic, social, and institutional structtire,other factors have militated against the use of Malaysia's conisieleableresources (described in Section 2) for the alleviation of poverty. Much ofMalaysia's exports, amounting to some 50 percent of GNP, are in primarycommodities, which are subject to wide price fluctuations. There has there-fore been a tendency to project revenues from these resources cautiously.

12. Average number of children born to women finishing their fertile period.

13. Much of this discussion refers to Peninsular Malaysia, with 85 percentof the country's population.

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In addition, much of the increased revenues, especially from oil, haveaccrued to the public sector. A policy of using these revenues to stimulatethe private sector, which is largely in the hands of foreigners and non-Malayresidents, could conflict with the government's objective of restructuringcorporate ownership under its New Economic Policy. Finally, perhaps becausecompromises must be carefully constructed between various interest groups,planning is adjusted only slowly to changing circumstances, while implementa-tion responds slowly to new planning directives.

During the 1960s, demographic factors and unfavorable economicconditions limited the growth of the labor force and probably induced someout-migration. As these effects wore off in the 1970s, labor force growthaccelerated to mwre than 3 percent a year. It will be some time before thereduction of fertility, which began in the 1960s, significantly slows thegrowth of labor force. As a result, the economy will have to absorb about140,000 workers a year from 1975 to 1990, nearly three times more inabsolute terms than the number absorbed annually in the 1960s.

Around 1975, agriculture provided work for nearly half the laborforce./14 As a result of severe constraints on annual cropping, most of thecultivated land is under tree crops, except for the relatively small rivervalleys which are under paddy. Even after 15 years of diversification, in1975 about 55 percent of the cultivated area in Peninsular Malaysia wasstill under rubber./15 The steep structural fall in rubber prices in the1960s thus dealt the economy a major blow. While the estates and largerfarmers could afford to replant with much more productive varieties, manysmallholders could not and suffered severe income losses. In addition, theprofit squeezed estates reduced their labor force. This cutback resulted inopen unemployment, out-migration, and absorption of many workers into thetertiary sector, probably in residual employment. Systematic data on reallabor incomes are not available, but the real wages of lower-paid workers inthe organized sector seem to have stagnated or have declined in most of the1960s.

On the positive side, the 1960s and 1970s were a time of significantdiversification for Malaysia, out of rubber and into palm oil, forestry, andmanufacturing, and, most recently, petroleum. These shifts prepared thecountry well to benefit from the world commodity boom of the early 1970s.

14. Because of the high export ratio and the consequently high degree ofcommercialization of the economy, the service sector is relatively large.

15. In substantial parts of East Malaysia hill paddy is grown underconditions of extremely low productivity and severe poverty.

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In addition, the New Economic Policy's ambitious development goals contri-buted to greatly accelerated growth in production and incomes. Many newjobs were created in labor-intensive light manufacturing, largely export-oriented. Increased activity in the public sector also created jobs, throughland development, for instance. Apart from some cyclical fluctuations, theeffects of these developments on real wages have, however, not yet been verypronounced.

The main reason for this disappointing result apears to be that thebenefits of development have largely focused on a number of special groups.The modern manufacturing sector, geographically concentrated in and aroundlarge towns and sectorally concentrated in textiles, clothing, and electro-nics, mainly hired young girls, and the effect has not percolated throughoutthe countryside, where many of the disadvantaged appear to be undereducatedolder farmers, mostly Malay. The government's development program hasbrought substantial benefits to agriculture, but only for a limited numberof households.

In so segmented a labor market, the incomes of each group of workersmust be examined separately. Rubber smallholders as a group, on an averagehousehold basis, may have experienced a fall of up to 20 percent in realincome in the 1960s, and a return to slightly more than the 1960 level inthe 1970s. But this average contains households with plots of up to 40hectares as well as new settlers on government-developed land with plots of4 to 5 hectares, who must have done better than the average. On the otherhand, small farmers who could not afford to replant must have fared worse.Although paddy farmers on average improved their incomes by some 20 percentin the 1960s and another 20 percent in the 1970s, these gains must also havebeen heavily concentrated among the beneficiaries of new irrigation projects.It is probable that the smaller group of farmers dependent on coconutcultivation also saw its income decline.

In general, the problems of agricultural poverty are related to smallfarm size and low returns per hectare, often in combination because a smallfarmer cannot finance the investments or inputs to improve yields. InPeninsular Malaysia in 1977, smallholder agriculture consisted of nearly800,000 households cultivating an average area of 2.8 hectares, or 0.5hectares per person. To stay ahead of poverty without outside means, ahousehold with such a holding must secure returns per hectare of twice thepoverty lines in Table 5, US$400 and $265, respectively, for the formal andinformal poverty lines. Most crops provide such returns (an importantexception being "old" rubber at $100 a hectare), but many farmers havesmaller holdings or obtain less than average yields. Problems of tenancyclose the noose, consigning many smallholder households to live in poverty.

In comparison, workers in the organized sector are well off (forthe unorganized nonagricultural sector, no data on labor incomes are

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available). In 1977 daily %rnskilled wages for males were about US$3.00 inurban and $2.40 in rural areas. For females, the rates were $2.40 and $2.00,respectively. At these rates, substantial numbers of dependents can besupported. Considering also that employment for secondary earners is morereadily available in large urban centers, this explaJns the relatively lowincidence of poverty in urban areas, where probably only a relatively smallnumber of workers in the informal sector are in poverty. Rural workers inthe formal sector, especially on the estates, may, however, find it ditficultto secure secondary incomes for a sufficient number of family memabers.

With regard to public policy on the provision of basic services, thepoor are well represented in the use of public medical care and primaryeducation, but many cannot afford to pay for utilities, even if they haveaccess to them. Recent achievements in education have been impressive, withregard both to enrollment and to the correction of racial imbalances. Adultilliteracy among the old remains a problem, however, and probably contributessignificantly to rural poverty. In health, standards of preventive care arehigh. Fertility started to drop in the early 1960s, and by 1977 theestimated total fertility rate had declined to 3.8 children.

Although the government has demonstrated its commitment to the allevia-tion of poverty, weaknesses persist in policy coordination. The inabilityto apply abundant resources to the alleviation of poverty has been mentioned.Heavy export taxes are levied on rubber, even though rubber smallholders areone of the most important poverty groups. Information on poverty householdsin rubber is available only at the State level, not at federal level. Rubberreplanting grants have been adjusted only sluggishly for inflation, and havenever covered income supplements while new trees reached maturity. Regulatoryinterventions in private enterprise to achieve ethnic restructuring haveprobably not taken sufficient account of their negative indirect effect onsuch restructuring through dampening overall activity. Accumulating petro-leum revenues may be devoted to capital-intensive investments in the petro-leum and petrochemical sectors, while poverty alleviation proceeds onlyslowly. On the other hand, some major policies, such as the stimulation ofmanufactured exports and the long-standing commitment to publicly organizedland development have undoubtedly helped to alleviate poverty.

Indonesia: Complexities of a Rapidly Growing Poor Economy

Indonesia's case is too complex to be explored satisfactorily in this shortpaper. Large and internally diverse, this country underwent a major socio-political upheaval in the 1960s so that meaningful comparisons can onlybe made for the extremely short period 1970-76. Furthermore, whatever dataare available on poverty are subject to wide differences of interpretation.The complexity of the labor market structure contributes to the analyticaldifficulties, especially in Java where the number of impoverished indivi-duals probably exceeds the combined totals of the other four countries.

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The extreme scarcity of land has forced many persons, especially the poorand landless, to eke out a living in a multitude of mainly informalactivities, further complicating the labor market.

There nevertheless are many points of agreement. Indonesia is atthe lowest welfare level of the five countries, according not only to percapita income level but also to such basic indicators as life expectancy(below 50 years in 1977). The incidence of poverty is high.

Compared with the other countries, population growth has been low forsome time, especially in Java. Recent growth of the working-age populationhas been above 2.5 percent. Overall labor absorption over the period1971-76 has been high, between 3 percent and 5 percent in 1971-76 (dependingon the interpretation of statistical data). Labor absorption into modernmanufacturing has been disappointingly low, and much labor has gone into theresidual-service and cottage-industry sectors. Badly rundown infrastructurehas been repaired and expanded, using labor-intensive methods whereverpossible.

Judging from the consumption and expenditure surveys of 1970 and 1976,there has been widespread agreement that large segments of the Indonesianpopulation, including middle-income owners of land or other assets, haveprobably benefited from the country's rapid recovery from the grave economicconditions of the mid- and late 1960s. Since these middle groups wereinitially below the poverty line, there is little question that theincidence of poverty has declined.

Based on this evidence, its own findings of firmness in wage trends,and increased expenditures by the poor, the Bank concluded in its 1979Employment and Basic Reports that the welfare of the poorest improved in the1970s. This view has been challenged by myself and others both inside andoutside the Bank on the grounds that the wage information is scant and incon-clusive, that the caloric consumption of the poor has not increased,/16 andthat in the stratified Javanese society the poor may not have access to thebetter-paid Jobs covered by the statistics. Either interpretation could fitinto the general framework of Section 4. In the optimistic view, largelygovernment-initiated (and oil-financed) primary impulses, together withsubstantial multipliers (proceeds from nonoil taxes showed a relative

16. It appears that the very poor used most, if not all, of the "real"consumption increase to shift from maize to rice, and within rice to thebetter qualities (changes not measured by a fixed-weight index). Even ifinterpreted as revealed preference by very poor consumers (an assumptionwhich may be challenged) this casts a special light on the character of theconsumption increase that the very poor were able to obtain.

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decline) could have been large enough to absorb substantial additional laborat constant labor incomes. Thus, the poor were able to increase their laborinput in exchange for higher consumption. In the pessimistic interpretation,development was accompanied by a decline in the availability of poor man'sfoods (and perhaps some traditional jobs were eliminated) forcing the poorestto work harder to keep their real consumption constant.

Data collected in connection with the government's public works programin 1977 indicate daily wages of US$0.70 to $1.00 in rural and urban Javaalike. Assuming 250 days of work a year, these wages allow only about onedependent a worker in the poorer rural and in the urban areas, even if theinformal poverty line is used. These wage data are thus roughly consistentwith data on the incidence of poverty. In the other islands, wages areconsiderably higher ($1.00 to $1.50 a day). These areas tend to conformmore to the first type of poverty (Section 4) where land productivity islow, and labor may not be in surplus.

The government exercises significant control over the industrial sector,but apart from the large subsidy on oil products Cif yalued at internationalprices) it seldom intervenes directly in the market. The governmenthas used its oil revenues and increased external borrowing to finance publicexpenditures (including many capitalintensive projects), badly neededincreases in civil servants' pay, and successful public works programs. Thedecision to use part of the oil revenues to finance domestic expenditureshas put pressure on the domestic prices weakening Indonesia's internationalcompetitive position and limiting the availability of domestic credit to theprivate sector. Both factors have worked against the government's intendeddevelopment of private labor-intensive enterprise. Recently, the exchangerate has been adjusted.

With regard to the provision of basic services, Indonesia's comparativeperformance can be seen in Table 4. In health care, the government'sapproach has been appropriate, but rural facilities remain underutilized.Child mortality rates remain high, and the supply of safe water is tight. Onthe positive side, Java's innovative family planning program has been verysuccessful, but it has been introduced only recently in most of the otherislands. Many new primary schools have been built under the public worksprogram, major progress has been made in the provision of books, and primaryeducation now reaches more than 80 percent of school-age children. Progressin secondary and higher education has, on the other hand, been too slow tomake a significant impact on the current shortage of middle- and higher-levelmanpower, which will probably grow more severe. In terms of geographicaldistribution, government expenditures appear to have been allocatedequitably. In general, the less-populated provinces have received higherallocations per capita, but these have been roughly offset by higher pricesin the "Other Islands."

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6. Conclusions and Implications for Policy

As mentiond in the introduction, this paper has focused less on directmeasures to alleviate poverty, than on the socioeconomic mechanisms thatcause poverty to occur and persist in East Asia and probably elsewhere. Ifeffective policies to alleviate poverty are to be developed, these mechanismshave to be understood. I have organized my conclusions, many of which stillare tentative, under the headings: macro and labor market aspects; sectoraland regional aspects; basic needs and human resource aspects; thoughts on theBank's work and country relations; and the need to devise integrated strate-gies for poverty alleviation.

Macro and Labor Market Aspects

No matter how weak the statistics, in East Asia there appears to havebeen a clear relation, over countries and periods, between the growth ofnational income (and private consumption) and success in the alleviationof poverty. It has been argued in the Bank's reports on Korea and Malaysiaand in its 1975 Basic Report on Indonesia that very rapid growth -- of some9 percent a year -- would be necessary for the benefits of economic develop-ment to reach the poor. As in this paper, the argument was made mainly interms of the need to absorb sufficient labor./l It is probably no coinci-dence that, except for Indonesia, the countries for which the argument wasmade most strongly were close to or already realizing the proposed growthrates.

Elsewhere, the proposed strategies to deal with poverty have ofnecessity been less clear-cUt. To the extent that they address the problemsof poor farmers, the proposals have a sectoral slant (see below); where theproblem is mainly population pressure and lack of assets, they tend to centeraround measures to increase labor productivity. I find these proposals oftenless than convincing since much of the potential surplus labor is engaged intraditional service and handicraft activities where demand rather than supplyis the limiting factor. Under those circumstances one worker's gain inproductivity and sales means reduced opportunity for another.

1. The main elements in the argument are as follows. Given already highlabor intensity in agriculture (or constraints on land development, as inMalaysia) it is difficult to obtain an increase in (nonresidual) agriculturalemployment which exceeds 1 percent a year. If half the labor force is inagriculture and the objective is to absorb labor productively at a rate of3 percent a year, this implies an absorption of 5 percent a year, outsideagriculture. Assuming an employment elasticity of 0.5, this implies anonagricultural GDP growth of 10 percent a year, and an overall economicgrowth (including 5 percent for agriculture) of 8.5-9 percent.

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Sectoral and Regional Aspects

Short of advising all countries to attempt to grow as fast as Korea,what useful suggestions can be made? If an important poverty group consistsof owner-cultivators, agricultural development can be an essential elemert inthe poverty reduction strategy. The focus should then be on the poorestfarmers. In Thailand, for instance, further development of relatively richrural areas will contribute little (and then only indirectly, see below) tothe eradication of poverty. On the other hand, increasing the incomes of themarginal farmers, as a group, in the North and Northeast would also improvethe situation of the poor in Bangkok. Unfortunately, for one important groupof farmers, those on rainfed poor soils, technology packages have been slow tomaterialize, and the methods by which their incomes can be increased aretherefore not clear./2 For farmers on richer, and often irrigated soils,technological solutions are clearer. Unless these lands are very evenlydistributed, however, the landless rather than those farmers form the majorpoverty group. (The Korean example illustrates the importance of timelyland reform. Once the typical farm size falls below a certain minimum, asit has in Java, land redistribution becomes problematical). To the extentthat improved conditions for the less poor who own some land can increasedemand for hired labor and also help to keep landowners and their childrenon farms and out of the labor market, agricultural development for thehigher income group of farmers can improve the conditions of the poor. Thus acarefully conceived agricultural development policy can and must play aleading role in an integrated antipoverty strategy.

Agricultural and food prices present another very important issue.Two of the five countries (Thailand and Korea) have let their domestic foodprices deviate substantially from international levels, but in oppositedirections. Yet both have been successful in the alleviation of poverty. InKorea, farm-price supports for grains (only partly paid by consumers) haveincreased farm incomes substantially, both directly and via their incentiveeffect on production. In Thailand, the opposite has occurred, with severerepurcussions on the group of very poor farmers growing rice under rainfedconditions and unable to diversify.

On the other side of the argument, comparison of labor incomes to povertylines in all five countries has shown the importance of low food prices forthe poor. Considering also, however, that farm price supports can benefit theurban poor to the extent that they keep people on the farm and thereforetighten the labor market, the balance of the argument tends to come out infavor of farm prices set at least at international levels. This conclusion isstrengthened if the possibility is recognized of intervention in the markets

2. This is not true for tree crops. There financial resources or a lack ofpublic implementation capacity are generally the constraint.

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for poor men's foods. In this connection it should be pointed out that untilrecently some governments (for example, in Indonesia) have emphasized riceproduction over the production of cheaper foods. Apart from foodgrains,governments have influenced other agricultural prices, the export tax onrubber in Malaysia (which has been a heavy burden on poor smallholders) beinga clear example.

With regard to other sectors, manufacturing is second only to agriculturein importance for the alleviation of poverty. Its historic role is well knownin the creation of employment not only in Korea but also in Taiwan and in thecity-states of Hong Kong and Singapore, and to a lesser extent in Malaysia.In the manufacturing sector, labor intensity is an essential requirement, andthe East Asia region also contains two examples of lack of success in thisarea (Indonesia and the Philippines). Experience also indicates that themultiplier and other indirect effects of development of light industry aresubstantial.

Policies in other sectors, such as power and transport, are also impor-tant because they absorb major parts of scarce investment resources. A themethat recurs in a number of countries is the importance of communications,especially rural roads, for the alleviation of poverty (through opening newareas, decreasing transport and marketing margins, and spreading resources).Another strategic question concerns rural and regional development: it isargued in all countries (in my view convincingly) that placing economicactivity, and especially manufacturing, in the countryside will significantlyenhance its local multipliers and will therefore be important for the alle-viation of poverty. Experience in Japan and Taiwan supports the argument.However, this appears to be a case where private and social gains may diverge,and few regional policy successes can documented in the five countries. Thisissue deserves substantial attention in the context of integrated antipovertystrategies.

Basic Needs and Human Resource Aspects

In this paper I have not dwelled on the possible tradeoffs between humanresource development and economic growth. Considering the very high payoffthat rapid economic development has had in terms of human welfare in EastAsia, and considering also the fact that, except perhaps in Indonesia, thisgrowth does not appear to have been constrained by human resource factors, thetemptation is great to give priority to growth and to let it furnish theresources for human resource development. However, anyone who reviews thegrowing body of evidence on the transmission of poverty from generation togeneration through malnutrition and undereducation of children cannot fail tobe impressed by it. Intervention in this area therefore appears wellwarranted, and the five countries can probably afford them. The question ishow effective they can be. Conclusions should not be drawn hastily, but thefact that simple curative health services in the countryside appear to

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suffer from underutilization in several countries gives food for thought.Preventive health measures should probably receive priority, but that iseasier said than done.

With regard to education, wage differences between skilled and unskilledworkers seem to have decreased in some of the countries. Whether this helpsor hurts the poor remains to be seen. In some cases (rice production andinfant mortality in Thailand, for example), the direct impact of educationon welfare seems great. The question is whether the desired effects can beachieved using shortcuts or whether only full education can do that. Thereis also the question of the undereducated older people being left behind inthe countryside: can education do anything for them? I have found no easyanswers to these questions.

The Bank's Work and Country Relations

Since the World Bank started to address the basic question of poverty,progress has been made in defining and analyzing the problem. Still, muchremains to be done. Considering that so many factors and policies thatinfluence the welfare of the poor, what has been missing is an integratedapproach to the problem, one in which the right hand indeed knows what theleft one is doing. If substantive efforts are to be made to help theclient countries in the development of integrated strategies that aresubstantially centered around the poverty problem, this subject needs muchmore attention.

Successful analysis and policy formulation however depend on improvedinformation on the actual situation and trends. In this paper, I haveattempted to show that we still know very little about poverty and itscauses and even less about changes in the real incomes of the poor. Largeperiodic surveys are undertaken in the countries, but major questionssurround the accuracy of the observations, and the manipulation of largedata sets has proven to be difficult. Micro-studies have their ownlimitations, but it is my impression that much more could be learned fromthem, and from careful longitudinal observation of the lives of poor people,even if the sample is small. Improved information demands intensivecollaboration with researchers in the countries. In this context, theBank's Living Standard Measurement Study is urgent and timely.

However, it is questionable whether the Bank can make decisive contri-butions toward the observation of poverty trends and the formulation andexecution of integrated antipoverty strategies with its present level ofmanpower and expertise. It appears to me that significant progress can bemade only if, in close collaboration between client countrles and the Bank,a minimal critical mass of analytical talent is deployed and permanentlyassigned to analyze poverty issues in each country or group of countries.

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To be successful, such a technical effort needs to be supported by periodicreview at high level meetings between the country and the Bank.

Are Integrated Antipoverty Strategies Necessary?

But why should all the above be attempted? Is it really necessaryto develop and implement integrated anti-poverty strategies to succeed ingradually eliminating poverty? Perhaps not. The Kuznets curve is there toshow that after a period of getting worse, income distribution will tend toget better. Apart from that it can also be argued that, historically, majorchanges have not often come about in a planned manner. Perhaps it is no morethan a technocrat's dream that broad strategies could be developed andimplemented to attain such changes.

In my view, however, the evidence presented in this paper clearly showsthat a specific focus on poverty in the review and initiation of both generalas well as more narrowly focused socioeconomic policies would not fail to makethe overall policy package more consistent and effective in getting to gripswith poverty. Given the importance of this issue to many millions of people,it appears that the cost of such an effort can be very small in relation tothe potential gains.

The experiences discussed in this paper give little cause for compla-cency. In the five countries and over two decades (for 10 "countrydecades"together), poverty was reduced only in six. Two of these successes (inThailand) were linked to continued land availability, (a favorable factor nowending) and one (in Indonesia) was partly related to a recovery from a periodof disastrous economic management. The "score" thus stands at aboutfifty-fifty in a period characterized by unprecedented worldwide economicgrowth. While population growth has indeed been reduced very significantlysince then, the labor force will continue to grow rapidly in nearly all thecountries. There then appears to be a significant risk of stagnating or evenfalling labor incomes in East Asia, with inequalities and perhaps evenabsolute poverty increasing. It appears imperative to attempt to minimizethat risk.

Table 1: Geography and Demography

IndonesiaOther Malaysia

Period Java islands Total Korea Peninsular Total Philippines Thailand

Land ResourcesLand area (millions of hectare) 13 190 203 10 14 33 30 51

Agricultural land/person (hectare) 1960 0.3 0.1 0.7 0.3 0.5mid-1970s 0.2 0.06 0.5 0.2 0.4

Harvested area/person mid-1970s 0.2 0.3 0.2 0.5/a 0.5 0.5dependent on agriculture (hectare)

Other Main Natural ResourcesExports from minerals, 1970 4 n.a. 126 27 6forestry, (dollars per capita at 1977 1977 8 n.a. 125 14 6prices, excluding oil)

Petroleum production (billions of barrels 1977 4.6 n.a. 5.2 n.a. n.a.per capita)

PopulationPopulation (million of persons) 1960 62 33 95 25 8 27 26

1977 84 50 134 36 13 44 44

Population annual growth rate 1960-70 1.9 2.4 2.1 2.4 2.9 3.0 3.1(percentages) 1970-77 1.7 2.5 2.0 2.0 2.7 2.7 2.9

Number of births (million of persons) Av. 1955-60 4.12 0.99 0.34 1.05 1.15Av. 1965-70 5.04 0.94 0.39 1.54 1.451977 4.96 0.86 0.38 1.54 1.41

Average number of persons 1955 1.86 0.46 0.14 0.49 0.49in cohort of 15-19 year 1965 1.80 0.53 0.18 0.67 0.58olds (million of persons) 1975 2.85 0.87 0.27 0.92 0.92

1985 3.74 0.88 0.35 1.i7 1.29

/a Smallholders only.

n.a. Not available

Sources: Calculated from IBRD World Development Report, 1979, UN Population Statistics, and unpublished data.

Table 2: Investment and Public Revenues and Expenditures(percentage of gross domestic product)

Period Indonesia Korea Malaysia Philippines Thailand

Investment 1960 8 11 14 16 161970 14 27 17 21 251977 21 26 23 30 26

Public revenues 1960 13 13 n.a. 10 131970 10 19 24 11 141977 18 22 29 15 14

Public expenditures 1960 n.a. 21 n.a. n.a. 131970 12 19 27 12 181977 22 20 37 16 18

For:defense and general services 1970-77 n.a. 9 13 5 6economic services 1970-77 n.a. 4 10 4 4social services 1970-77 n.a. 4 9 3 5

Memo item: resource balance /a 1960 0 -11 13 0 11970 -3 -10 4 0 -51977 1 -1 8 -5 -5

n.a. Not available

a. Defined as the surplus of exports over imports (GNFS) or as the surplus of domestic saving overdomestic investment

Sources: IBRD World Development Report, 1979; IBRD World Tables, 1976. Unpublished data.

Table 3: Main Economic Development Indicators

Total EconomyGNP per capita (IBRD Atlas method, 1960 90 120 230 140 100

US dollars) 1977 300 820 930 450 420

GDP annual growth rate (percentages) 1960-70 3.5 8.5 6.5 5.1 8.21970-77 7.7 10.4 7.8 6.4 7.1

International terms of trade 1960 138 78 139 73 118(index, 1970 - 100) 1977 253 76 114 68 75

GDY annual growth rate (percentages) 1960-70 3.0 8.5 4.8 5.7 8.01970-77 10.4 9.2 8.6 5.6 6.4

Annual growth rate in private 1960-70 1.2 4.8 1.3 1.7 3.8consumption per capita (percentages) 1970-77 6.3 4.8 7.2 1.7 3.1

AgricultureGDP annual growth rate in 1960-70 2.5 4.5 n.a. 4.3 5.5agriculture (percentages) 1970-77 4.2 5.0 5.4 4.8 4.4

GDP per agricultural worker 1960 72 61 59 43 49(percentage of average GDP per worker) 1970 68 66 56 54 38

1977 52 60 59 57 35

Percentage decrease in share of agricul- 1960-77 20 30 30 15 10ture in total labor force from 1960 level

ManufacturingGDP annual growth rate in manufacturing 1960-70 5.0 17.2 n.a. 6.0 11.7

(percentages) 1970-77 12.9 17.0 9.3 8.7 10.3

Manufacturing's share in GDP (percentages) 1977 9 25 18 25 20

Value of manufactured exports (US dollars per capita) 1976 191 190 65 14 13

n.a. Not available.

Sources: Calculated from IBRD World Development Report (1979) and unpublished data.

- 42 -

Table 4: Health, Education, and Fertility Control

healthLife exp-ectancy at birth (years) 1960 41 54 57 51 51

1977 48 63 67 60 61

Life expectancy at birth; 1977 - + + ++ ++

relat ve performance

Numbers of physicians and nurses 1977 41 247 117 69 41

per I 10,000 population

Percenteges of population with access 1975 12 62 62 39 22

to safe water supply

EducationLiteraci rate (percentages of adult 1960 39 71 53 72 68

population) 1975 62 93 60 87 84

Adult ltteracy rate, relative 1975 + + - ++ +4

performance from:

primary enrollment ratio, 1960 86 99 108 98 88

male (percentages) 1977 91 111 96 103 86

primary enrollment ratio, 1960 58 89 83 93 79

female (percentages) 1977 81 L11 91 108 79

secondary enrollment ratio, 1960 6 27 19 26 13

(percentages) 1977 21 88 43 56 27

Secondary enrollment ratio, 1976 - ++ ++

relative performance

Fertilit ControlMarried women using contra- 1977 19 44 36 22 40

ceptives (percentages)

Decrease in crude birth rate 1960-77 18 52 30 21 31

per 1,000 fertile women(percentages)

Total lertility rate (percentages) 1977 4.9 2.8 3.8 5.0 4.5

- Worse than norm in relation to per capita income

+ Bett(r than the norm++ Much better than the norm

Normi 1.

Sources: World Development Report, 1979; unpublished country data.

Table 5: Comparable Poverty Lines, Incidence and Trends

Indonesia Korea lfalaysia Philippines ThailandJava Other islands

Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban Rural Urban

Poverty Lines, 1977Comparable formal

poverty lines(US dollars a year) /a 142 214 127 209 245 298 198 221 175 229 123 154

Informal poverty line(= 2/3) 95 143 85 139 163 199 132 147 117 153 82 103

Informal povery line, aspercentage of consumptionper capita 47 70 33 55 30 36 25 28 39 51 25 31

Poverty IncidenceFormal poverty incidence

(percentages) 80 66 49. 61 (14)/b (20)/b 55/c 25/c 59 60 43 17Informal poverty incidence

(percentages) 55 42 24 32 (7)/b (13)/b 33 10 42 35 20 6Reduction in poverty

indicence in 1960s /d No Yes No No YesReduction in poverty

indicence in 1970s /d Yes Yes Yes No Yes

a. See Table B1.

b. Very approximate (based on total household rather than per capita household distribution).

c. Based on government estimates which probahly contain a large element of estimation. Figures are for Peninsular Malaysiaand are split agriculture-nonagriculture rather than rural-urban.

d. See text.

- 44 -Appendix A

The Concept of Poverty and Its Limitations

Once poverty is seen as a problem,/1 policymakers must assess its overallseverity and the urgency of dealing with it, identify the poor, and trackchanges in the welfare of different poverty groups. Ideally, informationshould then be collected at designated times about each individual's abilityto satisfy his or her basic human needs. This implies setting standards forthe satisfaction of these needs. Because it is impractical to look at allneeds, income is used as a convenient indicator of welfare, and the standardto be set becomes one for income. This limits the methodology in thatincome, cannot satisfy all needs. Those needs individuals cannot provide forthemselves then have to be examined separately (the Bank is doing this inthe context of work on Basic Needs).

The Bank's methodology sets income standards with reference tofood intake. Theoretically, such standards specify sufficient quantitiesof calories, proteins, vitamins, minerals, and other nutrients, but inpractice, in view of the varied diets consumed in East Asia, attention hasfocused on caloric needs./2 Caloric standards are difficult to set, however,malnutrition has been prevalent and a large part of the population has notattained its physical potential. Standards based on the attainment of thatpotential overstate the individual's daily food needs while criteria basedon actual body weight understate them. This problem has not been solved.

Another limitation of the methodology arises be'cause the unit ofobservation in income and expenditure surveys is the household rather thanthe individual. The satisfaction of individual needs is not measured.Moreover, in some studies, the income distribution is compiled on the basisof total household incomes. This leads to heavily biased results sincehousehold size is not properly accounted for./3 Even if household incomes

1. The conceptual and measurement problems of poverty are discussed in moredetail in C. Grootaert, "Methodological Issues in the Identification of thePoor" World Bank (December 1979).

2. In some geographical areas, too few of certain elements are consumed.Correcting such deficiencies, which is seldom costly, should be part of abasic needs strategy.

3. In one study, it was shown that 70 percentage of the households changeincome decile in moving from a household to a per capita household incomedistribution. It is now well established that the latter is the morerelevant one, even though there are economies of scale in running ahousehold.

- 45 -

Appendix A

are converted to per capita incowes,/4 the theoretical adequacy of averageincome per household member is tested not the satisfaction of individualhousehold members'needs. Recently, evidence has accumulated that withinhouseholds there are significant disparities in welfare, with children andoften also women being less well provided for. Again, this aspect, omittedfrom conventional poverty analyses, should be taken into account separatelyin policy formulation.

Apart from the practical limitations on the poverty concept, thereis the more fundamental question whether or not the application of generalstandards to specific households or individuals can lead to valid conclu-sions. For instance, households differ in composition and size. Youngchildren have smaller needs than adults, and the satisfation of at leastsome needs (housing, for example) is subject to economies of scale. Sinceboth the number of small children and the size of the household tend to benegatively correlated with per capita household income, the combined effectof these two factors can be significant./5

Important questions have also been raised recently about interpersonaland intrapersonal /6 variations in the need for food. To the extent that anindividual's reduced need for food leads to reduced intake and causes him tobe identified as poor, measurement errors will occur.

Finally, the poverty concept as applied by the Bank divides thepopulation into just two groups, the poor and the nonpoor, resulting in theloss of information about relative degrees of poverty.. To begin to dealwith this problem, at least one further distinction should be made -- betweenthe poor and the very poor.

Practical Problems in the Measurement of Poverty

In the study and measurement of poverty in the five countries, practicalas well as theoretical problems also arise, especially in setting thepoverty line income and in applying the poverty line to survey data.

4. This needs to be done for each household separately, rather than forgrouped data. It is a complicated conversion, which statistical officesare not always well equipped to make.

5. Where investigated, the effect of the conversion to adult consumptionequivalents on poverty incidence has been found to be limited; the secondfactor has seldom been investigated.

6. In the sense that an individual's food needs move along cyclical patternsof several weeks or longer.

- 46 -Appendix A

A poverty line is not difficult to set if it can be based on anincome and expenditure survey that includes not only information on amountsspent on the items consumed but also on the quantities consumed or pricespaid. It is then possible to convert the quantities of food consumed by thevarious income groups into calories, determine the income level at whichsufficient calories are consumed, and draw the poverty line accordingly.While everything still hinges on the quality of the survey, this method atleast provides a consistent framework for estimating poverty.

Among the five countries, such survey materials are available only forIndonesia./7 Even there, only limited rural-urban regional disaggregationhas been possible. In the other countries, prices of major consumptionitems had to be estimated from separate sources, and in none of them werethese price data sufficiently disaggregated by regions and rural-urban areasto allow the accurate reflection of geographical variations in the cost ofliving. As long as lack of information precludes the full incorporation ofthis factor in intracountry poverty comparisons, they must be severelyqualified./8

In addition to the question of price differentials, the question alsoarises about the quality of the items consumed. For rice, the major staplein the region, the prices of different grades sold in a rural market can varyby 20-25 percent, with broken rice falling well outside this range. Thepoor may also substitute other cereals for rice. For animal proteins, therange of qualities and prices is perhaps even wider. The absence of detailedinformation on the specific items consumed by various income groups thusintroduces substantial ucertainty in estimating the poverty line. Toovercome these difficulties a "poor-man's diet" (including qualities) can bepostulated and priced. Such an approach, however, fails to take account ofthe specific cultural, social, and economic conditions under which the poordecide their consumption pattern, and therefore mDves the whole exerciseeven farther away from reality. These difficulties are compounded when anattempt is made to make real income comparisons over time. Yet, withoutsuch comparisons, how are trends to be assessed in the real incomes of thepoor in relation to the "average" consumer? And what to do if price

7. Surveys in some other countries have collected, but have not fullyprocessed, data on quantities.

8. Evidence has been accumulating that there are wide rural-urban andregional disparities in price levels, which are often correlated withvariations in incomes. The uniform application of national or evenrural-urban poverty lines will lead to biased results (mostly in thedirection of overestimation of the incidence of poverty and variationstherein).

- 47 -

Appendix A

movements are at least implicitly available (as in Indonesia) but thequality of the food basket changes over time? That these are not onlyesoteric questions of statistical methodology is evidenced by the fact thatthe outcome of the debate on what has happened to the "real" incomes ofIndonesia's poorest partly hinges on the answer to this question.

With regard to the applciation of the poverty line to survey data,surveys always show national income and expenditure totals 20-40 percel.tbelow those in the National Accounts. Most practitioners feel tha. theNational Accounts, partly based on observed commodity flows, are to bepreferred. The surveys are generally presumed to be underestimated at thetop of the income distribution and perhaps also at the bottom (because ofunderstimated income and consumption in kind). This may bias the estimateof the total incidence of poverty as well as its breakdown over variousgroups. These biases may be exacerbated when successive surveys are comparedto establish true trends. This danger is ignored when the usual assumptionis made that the various biases remain the same over time, but thisassumption is more difficult to maintain if the national accounts showdifferent trends.

Apart from the above questions of measurement, infrequently takensurveys cannot deal satisfactorily with short-run variation in income,whether due to incidental factors affecting many households (such as theweather) or to purely stochastic factors affecting individual households.If incidental influences are large (for example, the Thai survey of 1972-73)the results have to be discarded. However, the weather is seldom completely"normal"; unrecognized variations in it can significantly influence theoutcome for the rural poor. Stochastic factors work differently, causing anunknown number of households in any particular survey to be counted as poor,when on an average of two-to-five years' income they are not poor./9Finally, over the longer term, the life cycle effect may cause households tobe temporarily poor (especially while the children are small), while overthe longer term they are not. All this is not to belittle the problems ofuncertainty or illiquidity, which may be severe for persons whose incomes aretemporarily low but who are, over a longer period, not clearly in poverty.Uncertainty and fear should actually be recognized as negative welfata. Inaddition, income fluctuations can have permanent effects if, for example,land has to be sold. Nevertheless, temporary poverty is different frompermanent poverty, and its alleviation needs different policy interventions.

9. This short-term variability in incomes may be one reason why annualsurveys disclose so much dissaving among the poor, which is not sustainableover a longer period. If not, it would have to be concluded that theincomes of the poor are indeed systematically underestimated (see page .. ).

- 48 -Avpendix A

In summary, the poverty concept and its practical applicationsuffer from many shortcomings. The current statistical base is just toothin, and its extention deserves a high priority. In the meantime, microstudies and other corroborative evidence should be used judiciously toidentify poverty and its trends. Pending improvements in the data base,much of the discussion in this paper is tentative.

- 49 -Appendix B

Actual Poverty Line Estimates

Poverty lines, as estimated in the course of country economic work,/1 arelisted in Table BI. They have been converted into 1977 prices, and assume auniform caloric intake of 2,100 kilocalories per day. To facilitate com-parison, data on the caloric composition of the diet and on food prices arealso included. No detailed review of these data is intended here, but a fewthings stand out. With regard to prices, the high domestic rice price inKorea is clearly reflected in the poverty line estimates, as is the low priceof rice (and other foods) in Thailand. In the latter country, however, thepoverty line is unduly low because the assumed main staple in the diet is100 percentage broken rice, which in fact is rarely used for human consump-tion. With regard to the quality of the diets, there are relatively largedifferences in the amounts of (expensive) animal proteins included, with theKorean diet being particularly austere. A more uniform reliance on consump-tion of animal protein in the diets would make a difference.L2 So would theinclusion of spices, beverages, and tobacco in the Thai diet. Also, assumingroughly equal textile prices between the countries, the amounts included inIndonesia appear unduly low. Finally, although this is more speculative,the amounts provided for "other" items in the Philippines appear to be onthe high side.

At the bottom of Table B1 the country poverty lines are roughlyadjusted for the above factors so as to enable their comparison. Stillthese poverty line estimates leave much to be desired, especially withregard to the urban-rural split, which for most countries does not have areasonably firm statistical base (see Appendix A, page 46). In thisconnection it is perhaps significant that for Indonesia, where the data usedare at least internally consistent, the urban-rural differential is muchlarger than for the other countries. In general, it appears likely that, atleast for cities, the price differential with the rural areas is larger thanthose numbers indicate. In contrast, the intercountry variations, basedlargely on food price differentials, and on higher needs for clothing andshelter in Korea, appear reasonably firm.

1. In the case of Korea, they are based on a Bank-supported project of theKorea Development Institute. _

2. On the other hand, there are undeniable cultural influences on thecomposition of the diets.

- 50 -

Appendix B

Table B1: Country Poverty Lines, 1977

Indonesia /aJava Other Islands Korea Malaysia Philippines Thailand

Rural Urban /b Rural Urban Rural Urban Rural Urban Rural tlrban Rural Urban

Percentage Caloric Composition of Diet

Rice and rice products 55.3 70.3 66.2 70.6 47.1 54.3 53.6 76.6 68.5

Other grains and tubers 27.6 3.5 18.0 10.6 45.1 9.9 25.2 0 0

Sugar 4.9 5.9 3.4 4.8 0.3 11.9 5.6 0.8 1.1

Animal products 2.3 6.7 3.3 3.6 1.3 10.1 8.1 8-0 12.0

Food Prices in US Cento

Rice (per kilogram) 32/e 31.L 32/e 33/L 63 66 33 33 34 39 12.4 12.4

Rice and products(per 1,000 calories) ) ) ) 18.5 19.4 9.4 9.5 8.5 10.0 3.4 3.5

} 7.8 } 8.2 } 9.4Other staples (per 1,000 } } } 9.5 12.0 12.1 12.3 10.4 12.1 - -

calories)Sugar (per 1,000 calories) ) ) 1 24.8 24.0 10.9 10.9 6.5 7.5 8.4 8.3

Animal products ) 37.1 } 26.9 ) 46.2(per 1,000 calories) I } 1 95.9 127.9 70.9 73.4 68.1 79.5 43.7 38.9

Other food (per 1,000 } } } 45.3 62.7 26.8 29.4 34.6 40.4 21.5 21.1calories)

Total food(per 1,000 calories) 12.9 18.9 12.4 18.9 17.6 21.1 18.5 19.2 15.6 18.3 9.3 11.0

Annual Per Capita Expenditures inUS Dollars

Food n.a. n.a. n.a. n.a. 125 149 142 147 120 140 77 92

Spices, beverages, tobacco n.a. n.a. n.. n.a. 11 12 7 7 8 9 0 0

Subtotal food, etc. 99 145 95 145 136 161 149 154 128 149 77 92

Clothing, etc. 6 10 6 10 19 21 22 20 16 18 n.a. n.a.

Housing, etc. 11 30 7 23 37 56 } 51 ) 72 20 32 n.a. n.a.

Other 10 26 7 20 31 29 ) 33 63 n.a. n.a.

Subtotal, nonfood 27 66 20 53 87 106 73 92 69 113 37 78

Total 126 211 115 198 223 267 222 246 197 262 114 150

Total, corrected /c 142 214 127 209 245 298 198 221 175 229 123 154

n.a. Not available.a. Data on caloric composition are for 1969-70. Since then, the contribution of major staples has remained constant in

Java, but has declined by about 6 percentage points in the "Other Islands."

b. Largely based on "Other Islands" results, since data for Java are implausible.

c. Corrections reflect an attempt to improve comparability between countries (see text).

Sources

- 51 -

REFERENCES

In addition to numerous unpublished reports of the World Bank,the sources for this paper include:

Adelman, Irma, and Sherman Robinson. Income Distribution Policy inDeveloping Countries: A Case Study of Korea. New York: OxfordUnitersity Press, 1978.

Bell, Clive. "The Prospects for Growth and Change in the Muda Region,"Washington, D.C.: World Bank, Development Economics Department,November 1979.

Bell, Clive, and Peter Hazell. "Measuring the Indirect Effects of anAgricultural Investment Project on Its Surrounding Region,"Washington, D.C.: World Bank Development Economics Department,November 1978.

Cochrane, Susan H. "The Population of Thailand: Its Growth and Welfare,"World Bank Staff Working Paper, no. 337, Washington, D.C.: WorldBank, June 1979.

Geertz, Clifford. Agricultural Involution, the Progress of EcologicalChange in Indonesia. Berkeley: University of California Press, 1970.

Goldman, Richard H., and Lyn Squire. "Technical Change, Labor Use andIncome Distribution in the Muda Irrigation Project." Washington, D.C.:World Bank, Development Economic Department, December 1977.

Gupta, S. "Income Distribution, Employment and Growth: A Case Study ofIndonesia." World Bank Staff Working Paper, no. 212. Washington, D.C.:World Bank, August 1975.

Hasan, Parvez. Korea: Problems and Issues in a Rapidly Growing Economy.Baltimore: Johns Hopkins University Press, 1976.

Hasan, Parvez, D.C. Rao, and others. Korea: Policy Issues for Long-TermDevelopment. Baltimore: Johns Hopkins University Press, 1979.

Ingram, James C. Economic Change in Thailand 1850-1970. Stanford:Stanford University Press, 1971.

International Monetary Fund. Government Finance Statistics Yearbook,Vol. III, 1979, Washington, D.C., 1979.

Kravis, Irving B., Alan Heston, and Robert Summers. International Comparisonsof Real Product and Purchasing Power. Baltimore: Johns HopkinsUniversity Press, 1978.

- 52 -

Lal, Deepak. "Wages and Employment in the Philippines," Washington, D.C.:World Bank, Development Economics Department, October 1979.

Mazumdar, Dipak, and Masood Ahmed. "Labor Market Segmentation and theDetermination of Earnings: A Case Study," World Bank Staff WorkingPaper-, no. 278, Washington, D.C., May 1978.

Morawetz, David. Twenty-five Years of Economic Development: 1950 to 1975,Washington, D.C.: Johns Hopkins University Press, 1977.

Pyatt, Graham, and Jeffery I. Round. "The Distribution of Income and SocialAccounts: A Study of Malaysia in 1970." Washington, D.C.: World Bank,Development Economics Department, November 1977.

World Bank. The Philippines: Priorities and Prospects for Development,Washington, D.C., World Bank, 1976.

World Bank. World Development Report, 1979. Washington, D.C., 1979.

World Bank. World Development Report, 1980. Washington, D.C., 1980.

World Bank. "Income Consumption, and Poverty in Thailand, 1962/63 to 1975/76.Staff Working Paper, no. 364. Washington, D.C., November 1979.

World Bank. World Tables 1976, Baltimore: Johns Hopkins University Press, 1976.

Young, Kevin, Willem Bussink, and Parvez Hasan. Malaysia: Growth andEquity in a Multiracial Society. Baltimore: Johns Hopkins UniversityPress, 1980.

PART II

HUMAN DEVELOPMENT IN SUB-SAHARAN AFRICA

Prepared by: David G. Davies, Western Africa Projects Department

The views and interpretation in this document are those of its author andshould not be attributed to the World Bank, to its affiliated organizations,or to any individual acting in their behalf.

- 54 -

Table of Contents

Page No.

I. Introduction ......................................... 55

II. Poverty in Africa: Evidence of Failure .... .......... 63

III. Manpower Development ................................. 76

IV. Education and Training ............................... 79

V. Health and Population ................................ 88

VI. The Role of the Bank in Human Resource Development ... 99

Table 2.1 Miscellaneous Estimates of Rural Poverty .... .... 64Table 2.2 Poverty and Minimum Budgets ..................... 65Table 2.3 Percentage of Total Population Undernourished ... 69Table 2.4 Index of Real Wages of Agricultural WJorkers ..... 70Table 2.5 Relative Inequality: Gini Coefficients .... ..... 71Table 2.6 Gini Coefficient of Concentration in the

Distribution of Landholding in Selected Countries 72Table 2.7 Microeconomic Indicators ........................ 73Table 2.8 Growth of Population, Labor Force and Gross

Domestic Product by Country 1960-76 .... ......... 74Table 2.9 Some Indicators for Sub-Saharan Africa .... ...... 75Table 3.1 Expatriate Employment ........................... 76Table 4.1 Primary School Enrollment Ratios .... ............ 80Table 4.2 Secondary School Enrollment Ratios .... .......... 81Table 4.3 Higher Education Enrollment Rates .... ........... 82Table 4.4 Structure of Enrollments in Africa .... .......... 83Table 4.5 Estimated New Job Creation ...................... 85Table 4.6 Unit Costs ...................................... 86Table 5.1 Crude Death Rates ............................... 88Table 5.2 Measures of Health in Less Developed Regions .... 88Table 5.3 Population per Physician ........................ 92

Chart 1. Links between Major Biological, Socialand Economic Problems ..... ...................... 93

- 55 -

I. INTRODUCTION

Objectives of the Paper. This paper discusses the major humanresource problems in Africa south of the Sahara and suggests a possible rolefor the Bank in assisting governments to alleviate them. It is argued thatthe lack of human resources constitutes the major constraint on the develop-ment of the region and that the strategies for removing this constraint shouldinvolve (a) a strengthening of public administration at both central and localgovernment levels; (b) greater efforts at manpower development to improvethe absorptive capacity of the modern sector and, equally important (c)formal and non-formal education programs associated with programs in health,sanitation, nutrition, family planning and water supplies, to transform thecultural characteristics of individuals and groups in rural areas--in short,to create in rural areas, a healthy human agent capable of perceiving andacting upon the opportunities for economic improvement provided by modernscience and technology.

The Setting. Almost all of the 42 countries in this region becameindependent national entities in the 1960's. Unfortunately, part of theirlegacy from the colonial period were boundaries which were determined withlittle regard to their political and economic viability. Almost withoutexception, the new states were not politically cohesive; individuals identified,with their tribal groups more than with their new "nationality" and nationalboundaries often bisected tribal areas. The political cohesiveness and thegovernability of the new states were further handicapped by poor communications;most countries have a number of indigenous languages (Nigeria has over 300)which makes inter group communications difficult. Moreover, poor roads deniedthe poorest groups in rural areas access to the few government services whichexisted, such as health and education services which are associated withnational governments and which could contribute to establishing politicalconstituencies and a sense of common nationality.

The physical isolation of the preponderant majorities of the newcountries' populations has served to reinforce the traditional rural socialand economic organizations, the basic unit of which is usually the village.Typically, in the villages, councils composed of the noblest and richestmembers, headed by a chief, exercise control over the lives of the villagers,including the division of labor and the distribution of products. At indepen-dence, these councils were the effective level of government for most Africans.While improvements in communications, and central government efforts to fostereconomic, social and political development have altered the traditional socialand economic organization in many rural areas, these organizations still playan important role in most peoples' lives.

In some countries, such as Mali, the central government has conscious-ly reinforced the powers of local councils as part of its political and economicdevelopment efforts. In Kenya, leadership in local councils has, since longbefore independence, served as a basis for entry into national politics. Infact, Kenya's local councils have, traditionally, taken the initiative from thecentral government in development efforts, particularly in the establishmentof schools. In Nigeria, the powers of traditional rural social organizationshave both consciously and unconsciously been diminished, partly as a result

- 56 -

of efforts to create greater national unity, but also as a consequence ofthe mobility of the rural population made possible by rapid growth in themodern urban sector, agricultural stagnation and by an extended familysystem with households in both the villages and in the towns which facili-tates migration.

The economies of traditional rural African communities are, ofcourse, viable, albeit at some of the lowest levels of living in the world.With a subsistence agriculture and physical isolation, some rural communitiesare essentially self-sufficient and largely independent of larger regionaland national economies, to say nothing of the international economy. How-ever, most now produce a cash crop of marketable surplus upon which they aredependent for a substantial portion of their income. Unfortunately, ineffi-cient markets and government pricing policies, which are often explicitlydesigned to favor the more politically volatile urban workers, diminish thebenefits which are received by peasant farmers. Also, most African govern-ments have traditionally used parastatal marketing boards and administeredprices to extract a surplus from farmers to finance public sector developmentprograms which are often not of direct benefit to farmers.

Because of their technological backwardness, undeveloped marketsand inappropriate administered prices, many rural African communities are notviable in the sense that they can, without significant technological andsocial change, provide for the basic needs of rural people as these needsare defined in terms of nutrition, health, education, housing and watersupplies. The preponderant reliance of most Africans on subsistence agricul-ture accounts for the fact that of the 32 poorest countries in the world, 22are in Africa South of the Sahara. In 1977, the 310 million people in theregion (excluding South Africa) had an annual per capita income of less thanUS$300. In 10 of the countries, per capita income was less than US$150. Theper capita income of the people dependent upon subsistence agriculture,typically comprising 60-90 percent of the population of African countries,ranges from about US$100 (in the Sahelian countries) to less than US$200,and is largely dependent upon the amount of rainfall and cultivable landavailable.

In more concrete terms, these levels of living reflect adult illiter-acy rates which are the highest in the world (up to 85% in some countries)and health conditions which are among the poorest. Crude death rates rangeas high as 30 per thousand and life expectancy averages 41.6 years and is aslow as 37 years (in some parts of the Sahel). Morbidity rates are very high,with children being the most vulnerable group, particularly to malaria, measlesand malnutrition. Infant mortality rates average 128 per 1,000 live birthsand are, also, the highest in the world.

The role of government. The agendas of the new African governmentsare formidable, with the first priorities being the achievement of defactopolitical and economic independence and the creation of national unity amongdifferent groups, the latter involving primarily the establishment of a legiti-mate and useful role for government itself, the institution preeminently

- 57 -

associated with "nationhood". The achievement of political and economicindependence has generally been perceived as involving the replacement ofexpatriate administrators and entrepreneurs by technical assistance personnel,the accelerated promotion of Africans to senior positions and the indigenizationin the ownership and staffing of private industry.

Without exception, the new African governments have promoted nationalunity and a sense of nationhood by using their preeminent powers for marshall-ing both internal and external resources to establish their role as agents ofeconomic development. Unfortunately, the governments have been severely handi-capped in performing a developmental role by the interrelated constraints oflack of resources, weak administrations, a paucity of instruments through whichthey may effect economic improvement and uncertainty about what would consti-tute a correct development strategy.

Lack of resources. African governments have typically been unableto marshall more than 20 percent of GDP for public sector activities andrevenues tend not to be buoyant relative to income. Because of the recurrentbudget implications of past development (capital) outlays, the governments ofeven the richest countries (Nigeria, Gabon, Ivory Coast) are now faced withserious financial problems. With both planners and foreign donors very nearlyexclusively concerned with capital projects, governments have tended to under-fund ongoing activities particularly education and road maintenance to financenew capital plant, the operation of which, in turn, cannot be adequately funded.Only France has assisted some countries by financing substantial proportionsof their associated recurrent budgets.

Further, many governments do not use the scarce resources availableto them very efficiently because of weak economic management and failure tointroduce technologies and organizations which will economize on these resour-ces. For example, a more intensive use of teachers, whose salaries often claim30 percent of total government budgets could permit sizeable increases in en-rollments at little additional cost. A reorganization of health systemstoward preventive village-base health services could profoundly improve theiraccessibility and, consequently, their effectiveness, also at little additionalcost.

The more serious resource constraint affecting both the public andprivate sectors has been a lack of high and middle level manpower to staffexisting government programs, much less to expand them. consequenceof this scarcity has been that African governments have relied far moreheavily upon official technical assistance to man the public sector andother expatriate personnel to man the private sector than the governmentsof any other region. Removal of the manpower constraint is proving far moredifficult than originally envisaged. Contrary to earlier perceptions, anexpansion in the enrollments in and outputs from formal educational andtraining institutions will not automatically assure the effective staffingof public and private institutions. The development of adequate careerstructures to provide normal periods of on-the-job training for novices,incentive systems, management, discipline and an adequate funding of operationsare equally important.

- 58 -

Further, providing the manpower required for staffing institutionswhich can operate effectively at the village level require, first of all, thedefinition, at least conceptually, of the activities of such institutions andthe associated manpower profiles. Since few countries have made very muchprogress in planning, much less establishing such institutions, appropriatetraining programs have generally neither been designed nor established.

Inadequacy of public administration. The public administrationsof the new governments were established by the colonial powers to maintainlaw and order and to foster the economic exploitation of the continent'seconomic resources. Until shortly before independence, in most countries,even expenditures on health and education were essentially aimed at creatingenvironmental conditions under which Europeans could work and in establishinga productive labor force for foreign commercial and industrial enterprises.Very little attention was given to improving the living levels of the greatmajority of Africans residing in rural areas who were almost totally dependentupon subsistence agriculture. The new governments were neither sufficientlystaffed nor properly organized to assume a larger role of fostering morerapid and broadly based economic and social development. Moreover, the policyinstruments were limited to those available to the colonial administrationwhich, in the absence of efficient product and factor markets, relied heavilyupon horizontally integrated public enterprises, administered prices and directcontrols. The indirect controls through economic incentives, which are avail-able to well developed market economies with good communications and entrepre-neurial capacity, were regarded as relatively ineffective.

The public sector was and continues to be heavily dominated bythese parastatals with their administered prices and direct controls. Afterindependence, the new governments expanded the roles of parastatals evenfurther to include, particularly in the former French colonies, responsibilityfor regional agricultural development. However, the expansion in the numberof parastatals often represented attempts to achieve new objectives other thanan intensification of the pre-independence development strategy which supportedthe commercial exploitation of primary commodities. These new objectives weresometimes ideological. For example, a desire on the part of Government forgreater public ownership of the means for production. Other objectives includedthe promotion of industrial investment through government participation inrisk, the provision of subsidized services and the creation of employment.Too often, the new parastatals did little to transform the lives of the majorityof Africans; in many countries, some parastatals have become positive liabi-lities. They have been used as employers of last resort (particularly inMali and Ghana); they have often been immunized from criteria of profitabilityby government subsidies and, where profitable, surpluses have often been usedin ways which provide little benefit to rural people (the West African MarketingBoards).

Since independence, the roles and styles of central governmentadministrations have reflected the purposes for which they were establishedin the first instance and preeminent among these activities was the managementand administration of formal school systems. While the point should not be

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stressed, at least partially as a consequence of this specialization, educa-tion, in almost all countries, stands second only to defense expenditures inits claim on government resources. In Ivory Coast and Nigeria, educationclaims well over 35 percent of the governments' budgets and current planswill elevate this proportion even higher.

More significantly, the health services managed by the publicadministration were set up along European lines very largely to providecurative medical care to expatriates, to the priviledged African elite andto the modern sector labor force. They are not only too costly to expandto cater to the needs of the great majority of Africans in rural areas, butthey are also incapable of dealing with African health problems which areessentially environmental. These environmental problems are both socialand physical and involve actions to improve sanitation, water, insect control,and the elimination of maladaptive practices through health education. InAfrica, too little progress has been made in establishing and administeringa health system accessible to villagers.

The new governments, with a few exceptions, have not been verybold in establishing administrative systems and institutions which wouldenable them to have much of an impact upon the rural poor; those countrieswhich made bold attempts (most notably Tanzania, Mali and, more recently,Benin and Ethiopia) have shown results which are mixed and controversialat best in terms of improvements in welfare. They have, nevertheless,established the basic institutions and instruments through which governmentscan affect development at the village level.

Beginning in the late 1960s and early 1970s, there has been aclear trend in increasing numbers of countries to experiment, on a pilot basis,with a variety of forms of new institutions. The Kenya Rural DevelopmentScheme, the Promovillage scheme in Ivory Coast and Bank-financed agriculturalprojects in Malawi and Northern Nigeria are examples.

The generalizations which can be drawn, based on experience withthese schemes, are:

(a) there is an emormous eclecticism in the new rural institutionswhich are emerging with differences based largely on ideology andsocial and economic circumstances;

(b) the success of new institutions depends upon the politicalmobilization of the peasantry and their organization for partici-pation in decision-making to overcome their fears of victimizationby the wealthy;

(c) the activities of new rural institutions are multisectoral anddepend upon the coordination between,and strong administrative andlogistical support from,the traditional ministries in the centralgovernment. Almost without exception, the new institutions sufferfrom weaknesses of the central government in these areas;

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(d) lack of management and technical skills at all levels of adminis-tration, including the new administrative institutions, is themost serious constraint on the development of the latter;

(e) the next most serious constraints are a lack of supportingresources and inadequate communications;

(f) finally, the success of new rural institutions depends uponclose attention to social, economic and political incentiveswhich can be provided to engender acceptance of change.

Experimentation with, and the development of, new administrativeinstitutions in support of new agrarian systems will be the most importantdevelopment task of the countries in Africa South of the Sahara during the1980s. Human resource development will be the most important objective ofthese new institutions and, conversely, the most important constraint upontheir development.

Human resource problems. The lack of skills and experience toman the modern public and private sectors has always been regarded as themajor constraint on economic development in Africa and, hence, the mostserious human resource problem. Other types of human resource problems,such as health, nutrition, basic and general education, were usuallyregarded to be of secondary importance -- problems which would be solvedmore or less automatically if the constraint on development imposed by lackof skilled manpower were removed. Implicit in this development strategywas the conviction that the development and spread of the modern sector,including modern plantation agriculture, would, through incentives providedby the growing and increasingly efficient factor and product markets, trans-form the traditional economies of rural areas. Another part of the strategywas that priority should be given, except for manpower development, todirectly productive activities which would produce resources for furtherdevelopment. The strategy had considerable respectability, being stronglyendorsed by influential academic and practicing development economists.

Fortunately, for the African governments which considered thisstrategy, it was the type of development with which their administrationscould most easily deal. Unfortunately, especially in a region where theproportion of people deriving their livelihoods from subsistence agriculturewas the highest in the world, the strategy, where adopted, does not seem tohave worked very well.

Evidence strongly suggests that the incidence of poverty in Africahas either been static or has increased absolutely during the last 10 years(Section II). Most governments were unable or unwilling to adhere to all ofthe priorities dictated by the accepted economic scenario. In response topopular demand, almost all were politically compelled to spend heavily onprimary and general education. Some, notably Tanzania and Mali, have sinceindependence, concentrated their efforts on the transformation of traditionAlrural institutions. In this context, Mali has given priority to the develop-ment of human resources in rural areas and has devoted considerable effort to

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the creation of the political and economic institutions through which thismight be accomplished.

The gradual realization of failure to ameliorate poverty in ruralareas has prompted a reexamination of the accepted set of development priori-ties in almost all countries in the region. Throughout the region, a newset of priorities has been emerging which places emphasis on village-basedrural development and investments in human resources at the village level,particularly basic education, health and nutrition. The strengthening ofcentral government services through reorganization and greater, althoughsomewhat differently oriented, manpower development schemes are increasinglyregarded as important to provide the support required for the implementationof the new strategy.

Further, the role in development of basic and general education,health and nutrition are being reexamined and, while there remains consider-able, though diminishing, controversy, donor agencies have generally acceptedthese areas as having priority. The unresolved controversies generallycenter on the argument that directly productive activities are preferable tothose which are not, on the economic benefits from human resource investmentsother than manpower training and the complementarities between differentkind of human resource investments, on the one hand, and between humanresource investments and investments in directly productive activities onthe other. Because of their complexity, these issues do not promise earlyresolution.

The following sections of this paper discuss human resourcedevelopment in the region under the following headings: Poverty in Africa;Evidence of Failure; Manpower Development; Issues in Education; Health andPopulation and, finally, The Role of the Bank in Improving Human Resourcesin the Region.

Confusion about appropriate development strategies. Because ofthe failure of the social sciences to resolve the issues concerning therelationship of human resources to development satisfactorily, governmentshave few guidelines to assist them in the formulation of overall developmentstrategies. However, what is clear is that the objectives of an overalldevelopment strategy are the most important determinants of the prioritiesassigned to different human resource investments.

For example, a strategy which is aimed at maximizing the growth inGNP would give a high priority to directly productive activities in themodern sector including large plantation agriculture. The appropriatecomplementary educational investments would favor secondary and tertiarylevels of education, and technical and vocational training to support alargely urban based industrial development. In health, priorities wouldbe given to a largely urban based system and to the maintenance of thehealth of productive adults. It is usually believed that the cost of select-ing this strategy is a growing inequality in the distribution of incomebetween urban workers and the preponderous majority living in rural areas.

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Those who favor this strategy argue that the rapid growth in GNP will providethe resource base which would later enable governments to adapt policiesfavorable to the rural poor.

A development strategy which would result in a different set of humanresource investment priorities might regard human resources as the ultimatebasis of national wealth and increases in GNP a consequence of the developmentand efficient use of these resources. This strategy would entail investmentsin the health and education of the entire population and would regard smallincreases in income of the rural majorities as important as relatively specta-cular increases in total income in one or more of the modern sectors. In theeducation sector, this strategy would give priority to basic education inrural areas and, in the health sector, to village based systems emphasizingmaternal and child health.

In Africa, the countries which have most closely approximated theformer strategy are Ivory Coast, Gabon, Kenya, Zaire and Zambia and the latterstrategy, Tanzania, Somalia, Ethiopia, the Central African Republic and, morerecently, Benin. At the outset, the choice of strategy in each case appearsto have been as closely related to ideology as to an analysis of the economicand social consequences of choosing one strategy over another. More recently,changes and alterations in strategy have been based upon experience and leanvery strongly in favor of the human resource development strategy.

Given the low level of human resource development in Africa andits general relationship to rural poverty, a strong case can be made forfavoring a general human resource development strategy in most Africancountries. The following sections of this paper show that African countriessignificantly lag behind countries in other regions in terms of major indica-tors of human resource development and that, not coincidentally, Africacontains the poorest people in the world.

Unfortunately, it is difficult to make generalizations about theconnections between human resource investments, in particular investments ineducation and health, and improvements in income and the alleviation of poverty;this is one of the serious shortcomings of a broadly based human resource de-velopment strategy. However, while it is known that improving skills andknowledge in rural working environments can be an effective, perhaps themost effective, means for alleviating poverty, it is also known that suchimprovements can be expensive and difficult, normally requiring complementaryinvestments in technical manpower and new organizations which in turn makedemands on already weak administrations and on the overburdened educationand training systems. While there is some evidence that formal educationcan improve farmer productivity, to say nothing of having impacts on fertilityand health practices, it also usually results in migration from rural areasand less than the desired impact on agricultural productivity. It is alsoknown that investments in a health service accessible to villages can be aparticularly attractive means for improving the welfare of the poorest peoplebut, like investments in rural skills, they are difficult to implement andrequire complementary investments in technical manpower and in new organiza-tions.

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II. POVERTY IN AFRICA: EVIDENCE OF FAILURE

The statistical evidence on poverty and income inequality in AfricaSouth of the Sahara is limited. However limited, it suggests that (a) povertyhas grown in incidence and income inequalities have increased over the lastdecade, (b) poverty is primarily a rural problem and its incidence amongpeople in rural areas does not differ much among countries at differentlevels of development. Roughly 60 percent of the rural population of Africancountries are poor and these comprise, almost entirely, subsistence and smallscale farmers, (c) poverty measures relating to nutrition, sanitation, watersupplies, health and education indicate that rural Africa contains the poorestpeople in the world and, with respect to nutrition, may be retrogressing,(d) income inequalities are among the highest in the world and appear to be,in some countries, increasing, (e) in recent years, agricultural output grewat a slower rate than population growth in the poorest countries and barelykept pace with population growth in the middle income countries. This de-velopment suggests that the incidence of poverty may be growing in the ruralareas of many African countries.

The Incidence of Poverty

Poverty may be defined in two ways. It can be defined in terms ofsome minimum income level or in terms of the minimum consumption of specifiedgoods and services. Using 1969 data, and assuming that an annual income ofless than US$75 constituted poverty, a World Bank study concluded that 60percent of the population was poor. Using 1972 data and defining povertyas persons with incomes less than US$117, an ILO study found that 65 percentof the population on the continent may be considered poverty-stricken.More recently, a Bank study, using mostly 1975 data, found- that many Africancountries had a poverty incidence of at least 50 percent.

Studies of household consumption in selected countries either tendto confirm the estimates of poverty incidence based on income levels orsuggest that such estimates may, in fact, be underestimates. The results ofhousehold survey data from 6 countries are shown in Table 2.1. Consumptionstudies indicate that when 50 percent of income from all sources is usedfor food, the household is in a state of poverty. If 70 percent is usedfor food, a household is suffering extreme deprivation. The householdsurvey data therefore indicate that the incidence of rural poverty inAfrica is much higher than the 60 percent generally estimated by usingincome data alone.

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Table 2.1 MISCELLANEOUS ESTI(ATES 07 RURAL POVERTYFROM HOUSEHOLD SURVEY DATA

X ofCountry or HouseholdsRegion Year in Poverty Poverty Standard Used

Sierra Leone 1970 70 At least 70% of total householdincome spent on food.

Kenya 1974/75 88 " "(Nyanza)

Tanzania 1969 88 More than 60% of total incomespent on food.

Lesotho 1967/69 91 Rs250 derived from poverty datumline which allowed for calorieintake of 2813 calories and for55% of total expenditure to bespent on food.

Northern 1970/71 51 At least 70% of total expenditureNigeria spent on food.

Ghana (Eastern 1965/66 74 At least 50% of total incomeRegion) spent on food.

Source: The figures are from the text of Charles Elliott "Rural Poverty inAfrica" (mimeo) (ILO, Geneva, November 1978) pp. 9-15.

Table 2.2 POVERTY AND MINIMUM BUDGETS IN SOME SELECTED AFRICAN COUNTRIES

Minimum Minimum Minimum GDP Percent ofBudget Per Person Budget Budget Per Read Population

Country Year Per Year 1970 prices 1970 US$ US$ 1970 Below Minimum Budget

Ghana 1970 C 60-75 ¢ 60-75 56.5 - 64 257 MIore than 50%(all areas) in rural areas

Lesotho 1978 R 152.6 R 78.68 109.80 74(both urban andrural based uponurban figures)

Swaziland 1976 R 77.75 R 46.30 64.60 270(urban areas)

Somalia 1967 Ssh 864 Ssch 572 90.80 - 79 42% urban(all areas) 70% rural

Sierra Leone 1977 Le 172 Le 92.00 109.80 147 65%(urban areas)

Le 125 Le 66.90 79.80 66%(rural areas)

Tanzania 1969 Tsh 457 Tsh 457 66.50 59 20%(urban areas)

Tsh 294 Tsh 305 42.70 65%(rural areas)

Zambia 1974 K 104 K 60.80 119.70 425 24%(urban areas)

K 74 K 85.50 85.10 52%(rural areas)

Source: Assefa Baquela and Rolf van der Hoeven "Poverty and Inequality in Africa"Unpublished and Undated Draft Paper ILO, 1979.

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SOURCES

Ghana: ILO/JASPA: Employment Problems in theRural and Informal Sectors in Ghana,Addis Ababa, April 1977. (Restricted).

Lesotho: ILO/JASPA: Options for a DependentEconomy, Addis Ababa, 1978. (Restricted).

Swaziland: ILO/JASPA: Reducing Dependence, AddisAbaba, 1977.

Somalia: ILO/JASPA: Economic Transformation in aSocialist Framework, Addis Ababa, 1977.

Sierra Leone: F. Lisk and R. Van Der Hoeven: Measurementand Interpretation of Poverty in SierraLeone, ILO, forthcoming.

Tanzania: W. Van Ginneken: Rural and Urban IncomeInequalities. ILO, Geneva, 1976.

Zambia: ILO/JASPA: Narrow~ing the Gaps, AddisAbaba, 1977.

SOURCES FOR GDP DEFLATOR ANDGDP PER CAPITA FIGURES

United Nations: Yearbook of National Accounts Statistics,1977 Volume II, International tables.

Except for GDP deflators for:

Tanzania: IBRD: Economic Memorandum on Tanzania,April 1977.

Swaziland: Central Statistical Office,Annual Statistical Bulletin; 1975.

Sierra Leone: Bank of Sierra Leone: Annual Report, 1977.

Somalia: IBRD Country Economic Memorandum, January1979.

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The Kenya and Ghana household survey data are particularly alarmingfor they were derived from relatively rich areas with long established cashcropping and show that an unexpectedly large proportion of the populationsare in extreme poverty.

In another study undertaken at the ILO by Assefa Bequela and Rolfvan der Hoeven, an attempt was made to define minimum "baskets' of goods andservices and to price them for 7 African countries, for urban and rural areas,at different levels of development. The results are shown in Table 2.1. Thestudy tends to confirm estimates of the incidence of poverty based upon incomebase lines and, moreover, underscores the essentially rural character of poverty.

Nutrition data from the FAO show that a basic indicator of poverty,the shortage of food, is widespread on the African continent. In 16 of the24 countries listed in Table 2.3, at least 30 percent of the population wasundernourished in the period 1972/74. Moreover, the incidence of undernourish-ment increased between the two dates in 13 of the 24 countries, was unchangedin 5 and declined in 6. The increased incidence was particularly sharp inthe Sahelian countries which, during this period, were suffering the worstdrought in recent history.

An indicator that the incidence of poverty may have grown duringthe last decade is the data available on the real wages of agriculturalworkers in 6 African countries. The time series in Table 2.4 show that thereal wages of agricultural workers declined in all 6 countries over theperiods for which they were recorded.

Income inequality. Estimates of income inequality in Africa revealsome surprises. It is generally believed that there is little inequalityamong African peasants and that mass poverty are results of primitive techno-logies and social and environmental constraints. Bank sector studies onHealth in Mali and Agriculture in Chad and Mali tend to confirm this beliefby showing that a kind of population arbritage equalizes per capita incomesbetween areas with high rainfall and good soil fertility and low rainfalland poor soil fertility. Comparisons of per capita incomes between areas,of course, reveal little about the distribution of income among householdswithin areas.

Table 2.5 shows the Gini coefficients for households and incomeearners for 13 African countries. The coefficients for rural Lesotho,Sierra Leone, Zambia and Sudan are not significantly different from thosefound in Asia; the coefficient for Botswana is high even by Asian standards.

The income inequality estimates tend to be confirmed by comparableestimates of land concentration shown in Table 2.6. These data show that in5 of the 10 countries in sub-Saharan Africa, the degree of land concentrationwas higher than in countries such as Sri Lanka, Thailand and South Korea.

The data presented and other studies show that there are greatdifferences among African countries in the degree of income inequality. In-come inequalities in such countries as Gabon, Kenya, Swaziland and Zambia are

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among the bighest in the world. In Zambia, in 1974, both the richest 2 per-cent and the poorest 50 percent claimed 20 percent of total income each. InSwaziland, in 1974, 24 percent of the total wage bill was paid to expatriateworkers comprising only 5 percent of the work force.

Another indicator of inequality in Africa is the comparison betweenagricultural and non-agricultural incomes; non-agricultural incomes are 4-9times agricultural incomes. All other countries in the world have ratioswhich are lower, 2 and 2.5.

Trends. Available data give an overall impression of stagnationin per capita income in a number of African countries and absolute declinein a number of others over the period 1960-1976. Per capita incomes seemto have declined in Chad, Somalia, Niger, Madagascar, Senegal and Ghana andstagnated in Mali, Rwanda, Upper Volta, Benin, Guinea, Sudan, Uganda andthe Central African Republic. In over 20 countries, there was a declinein per capita food production, by as much as 20 percent in some countries;by the late 1970s, Africa had become a larger importer of food on a per capitabasis than any other region in the world.

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Table 2.3 PERCENTAGE OF TOTAL POPULATION UNDERNOURISHED

1969171 1972/74

Botswana 33 30

Cameroon 14 16

Chad 34 54

Ethiopia 26 38

Ghana 22 20

Guinea 38 41

Ivory Coast 9 8

Kenya 24 30

Liberia 42 37

Madagascar 14 17

Malawi 19 14

Mali 38 49

Mauritania 36 48

Mozambique 34 36

Niger 36 47

Senegal 25 25

Sierra Leone 20 21

Somalia 42 40

Sudan 30 30

Swaziland 35 33

Tanzania 35 35

Togo 24 24

Zaire 34 44

Zambia 35 34

Source: FAO, The Fourth World Food Survey Rome, 1977) Appendix 19pp. 127-128.

Note: The undernourished are those with a per capita food intakeof less than 1500 calories per day.

Table 2.4 INDEX OF REAL WAGES OF AGRICULTURAL WORKERS (1970 = 100)

Country Category of Wages 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975-

Africa -

Cameroon Hourly wage rate - - - - - - 101.5 106 100 96 88.9 98.6 86.1 -for male andfemale workers

Ghana Monthly earningsof male workers - - 112.7 92.3 86.4 90.9 98.6 104.5 100 104.9 98.9 93.4 - -

Kenya Monthly earnings - - - - - - 93.8 97.3 100 106 100 92.7 86.7 87.8of male andfemale workers -

Malawi Monthly earnings - - - - - - 101.3 101.2 100 96.6 96.2 92.3 90.9 77.6of male and -female workers

Tanzania Earningsper month - - - - - - - 93.7 100 94.9 -92.6 - - -of male workers -

Zambia Earnings per month - - - - - - - 132.1 100 113.8 126.7 125.3 116.3 -of male andfemale workers

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Table 2.5 RELATIVE INEQUALITY: GINI COEFFICIENTS

Country Year Categoryl! Over-all Rural Urban

Africa

Botswana 1971/72 I 0.5740 -1974/75 H - 0.524

Chad 1958 I 0.3687

Dahomey 1959 I 0.4675

Gabon 1960 I 0.68991968 I 0.6439

Ivory Coast 1959 I 0.45561970 I 0.5342

Kenya 1969 I 0.6368

Senegal 1960 I 0.5874

Tanzania 1967 H 0.50331969 H 0.5973

Uganda 1970 I 2/ 0.4007 0.2716 0.3968

Lesotho 1970/71 H - 0.35+

Sierra Leone 1974/75 H - 0.32+

Zambia 1972/73 H - 0.394

Sudan 1967/68 H - 0.354

Source: Dharam Ghai, Eddy Lee and Samir Radwan, "Rural Poverty in the ThirdWorld: Trends, Causes and Policy Orientations", ILO, World EmploymentProgramme Research Working Paper, Geneva, May 1979, P. 19.

Note: 1/ I: Income receiver as the unit of measurement.H: Household as the unit of measurement.

2/ JASPA data.

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Table 2.6 GINL COEFFICIENT OF CONCENTRATION IN TEE DISTRIBUTIONOF LANDHOLDING IN SELECTED COUNTRIES

1960 1970

India 0.5900" 0.6386Pakistan 0.5178Sri Lanka 0.3300.- 0.4100Philippines 0.5200 0.5105South Korea 0.3872 0.3742Thailand 0.46003/ 0.4100Bangladesh 0.470 0.570

AFRICA

Botswana 0.5011Cameroon 0.4446Central African Republic 0.3713Chad 0.3700Congo 0.2893Gabon 0.4745Ivory Coast 0,4229Lesotho 0.3827Malawi 0.3634Sierra Leone 0.4382

LATIN AMERICA

Costa Rica 0.7816 0.8164Dominican Rep. 0.8040 0.7942Panama 0.7352 0.7842Puerto Rico 0.7383 0.7867Uruguay 0.8267 0.8238Brazil 0.8379Peru 0.7758Jamaica 0.7930

1/ Refers to 19612/ Paddy landholdings only3/ Refers to 1963

Sources: From Ghai, Lee and Rowan, op. cit., Gini coefficients fordistribution of landholdings based on data from the 1960and 1970 Census of Agriculturc in the respective countriesas reported in: FAO, Report on the 1970 World Census ofAgriculture, Country Bulletins, Rome, 1975; and AsianDevelopment Bank Rural Asia: Challenge and Opportunity(Praeger, New York, 1978) Table I.5.8 for all countriesexcept Sri Lanka, for which the figures were from A.R.Khan et. al. Poverty and Landlessness in Rural Asia; Table64.

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Table 2.7 MACROECONOMIC INDICATORS: SUB-SAHARAN AFRICA(MEDIAN VALUES)

Low income Middle incomeDeveloping DevelopingCountries Countries

GNP per capita (US$ 1976) 145 385

GNP per capita growth rate (1960-76) 0.95 2.8

GDP growth rate 1960-1970 3.9 4.91970-1976 2.4 3.6

Agriculture growth rate 1960-1970 2.1 3.81970-1976 1.6 3.3

Industry growth rate 1960-1970 7.0 7.61970-1976 5.0 5.6

Total population growth rate 1960-1970 3.0 2.61970-1975 2.5 2.6

Urban population growth rate 1960-1970 6.4 5.71970-1975 6.1 5.5

Labor force growth rate 1960-1970 1.9 1.81970-1975 1.9 2.0

Per capita food production1974-1976 (1965-67 = 100) 92 95

No. of countries with index of food production in1964-74 of: -

less than 100 - 21over 100 - 11

Distribution of countries by per capita growth rates(1960-76)

No. of countries with growth rates of:less than o -- 6O to less than 1- 71 to less than 2- 62 to less than 3- 63 and above - 7

Source: Table 2.8

TABLE 2.8 GROWTH OF POPULATION, LABOUR FORCE AND GROSS DOMESTIC PRODUCT BY COUNTRY 1960-76-

Population GNP per capita Index of Average annual growth rates (W)(millions) US Average per capita

mid-1976 1976 annual food GDP Agriculture

Countries with population growth 1965-67 = 1 0 0 1960-70 1970-76 196o-70 1970-76of 1 million or more 196o-70 Av 1974-76

Low-income countries 150 0.9 96 3.6 2.9 2.3 1.6

Ethiopia 28.7 100 1.9 83 4.4 2.5 2.2 0.9Mali 5.8 100 0.9 71 2.9 3-5 1.3 -0.8Rwanda 4.2 110 0.8 114 - 3.4 - 3.3Somalia 3.3 110 -0.3 91 1.0 2.1 -1.5 -1.2Upper Volta 6.2 110 0.8 84 1.5 3-3 0.0 3.2Burundi 3.8 120 2.3 101 5-4 1.4 - 1.0Chad 4.1 120 -1.1 76 2.5 0.8 1.8 -1.3Benin 3.2 130 0.1 83 2.6 2.3 - -0.3Malawi 5.2 140 4.1 107 5.2 8.9 2.9 5.5Zaire 25.4 140 1.4 93 4.7 4.3 3-9 1.9Guinea 5.7 150 0.4 94 3.2 5-3 2.1 10.2Niger 4.7 160 -1.1 67 2.7 -0.4 3.3 -4.0Lesotho 1.2 170 4.6 102 7.0 4.3 - - .Mozambique 9.5 170 1.4 95 4.8 -2.0 2.1 2.1Tainzania 15.1 180 2.6 113 5-4 4.2 3.7 2.5Madagascar 9.1 200 -0.1 90 - 0.3 - 1.2Sierra Leone 3.1 200 1.1 97 3.5 2.0 1.4 2.0Central African Empire 1.8 230 0.3 103 1.2 0.9 0.8 1.9Kenya 13.8 240 2.6 88 7.1 4-8 5.9 1.6Uganda 11.9 240 1.0 89 5.1 -0.1 2.8 1.3

Middle-income countries 750 2.8 104 5.7 6.o 3.6 3.2

Togo 2.3 260 4-1 59 8.5 4.1 4.3 3.0Can,uroon 7.6 290 2.8 108 5.2 2.7 6.5 3-4Sudan 15.9 290 0-4 117 2.9 6.1 3.3 8.8Angola 5-5 330 3-0 92 5.1 1.0 4.0 -0.7Mauritania 1.4 340 3.7 68 8.1 4.3 2.4 -2.1Nigeria 77.1 380 3.5 89 3-1 7-4 -0-5 -0.2Senegal 5.1 390 -0.7 96 2.6 1.8 1.9 3.4Zamtbia 5-1 440 1.7 104 4.0 3.1 2.0 3.2Liberia 1.6 450 2.0 108 6.4 - 2.9 6-3 4.9Co go 1.4 520 2.8 93 4.6 8.3 4.6 -7.2Ghana 10.1 580 -0.1 93 2.1 2i0 3-7 1.3Ivory Coast 7.0 610 3.4 124 8.0 6.5 4.2 3-5

Sources IBRD World Developpent Report. 1971. Various Tablea.

TABLE 2.9 SOME INDICATORS FOR SUB-SARARA AFRICA

couw.triej CNI(USS) Lifa Child death Populition % of Per capita idcm Enrollod in Adult(I w:ilon inhabitarnta per capsta expectancy rate 1-4% per nursing population with daily oalory as % of primary achoc litcLlly

o Mo1c) (1917) (1577) years (1977) parson (1976) accese to safe supply (1974) requirementa an % or aie rute %water (1975) group (1976)

Ethiopia 110 39 37 25 670 6 1 914 82 23 10Mali 110 42 32 3 040 9 1774 75 28 10SGn:llia 110 45 31 - 33 1 822 79 40 50.'urundi 150 45 28 6 240 - 2 307 99 22 10wnad 130 43 30 4 820 26 1 731 75 41 15lRwanda 130 46 27 16 000 35 2 086 90 61 23Upper Volta 130 42 32 4 890 25 1859 78 16 5Zaire 130 46 27 - 16 1685 85 86 -Mnlasi 140 46 27 4 570 33 2 397 103 63 25 -4Mlozasbique 150 46 27 - - 1 975 84 - -

liger 160 42 32 8 220 27 1827 78 21 8 ISierra Leone 190 46 27 - 2 224 97 37 15PIa.tania 190 51 20 3 300 39 2 003 86 70 66Ul.nin 200 46 27 3 100 20 2 007 87 53 11%esotto 240 50 21 3 780 17 2 287 99 119 40allacracar 240 46 27 3 760 26 2 386 105 92 50'u,,tra1 African Eepire 250 46 27 5 680 16 2 305 102 79-(e..ya 270 53 14 1 070 17 2 117 91 105 40

Mauritania 270 42 32 3 200 - I 663 72 - 17Uganda 270 53 17 4 410 35 2 096 90 51 -Angola 300 41 34 _ - 2021 86 - -

Togo 300 46 27 2 040 16 2 198 96 103 16CL.eroon 340 46 27 1 890 26 2 375 102 120.:u-na 380 48 23 860 35 2 318 101 44 30.iberia 420 48 23 3 150 20 2 010 87 62 -

'ligeria 420 48 24 3 210 - 2 085 88 49 -..ienegal 450 42 32 1 660 37 2 309 97 45 10'.obla .450 48 23 - 42 2052 90 95 39-vory Coast 690 46 27 1 710 19 2 654 115 87 20

Sources IBRD, World Development Roport 1979. Various tables.

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III. MANPOWER DEVELOPMENT

At independence, the lack of skilled and experienced high and middle-level manpower was regarded by African governments as the most serious impedi-ment to economic growth, a problem made more serious by the ambitious develop-ment plans which most countries embarked on shortly after independence. Manyof the countries attempted to solve these problems by the most systematicmeans available, beginning with manpower surveys which were to be used as abasis for the planning of education and training systems. These surveys, someof which were undertaken a number of years after independence, revealed theseriousness of the problem. One indicator of the magnitude of manpower short-ages was the large proportion of expatriates occupying positions requiring aminimum of primary education plus one year of formal training. These are shownin Table 3.1.

Table 3.1: EXPATRIATE EMPLOYMENT AS A PERCENTAGE OF TOTAL EMPLOYMENTOF TRAINED MANPOWER IN EARLY MANPOWER SURVEYS

Country Year Percent

Botswana 1967 42Ivory Coast 1962 45Kenya 1964 48Malawi 1966 18Nigeria 1964 13Somalia 1970 2Sudan 1967-68 3Swaziland 1970 35Tanzania 1965 31Uganda 1967 21Zambia 1965 62

Source: Richard Jolly and Christopher Colclough, "African Manpower Plans:An Evaluation" International Labor Review, 106, August/September1972, p. 210.

The shortages were most serious for high level manpower, i.e., foroccupations requiring a university degree. In five of the countries surveyed(Ivory Coast, Kenya, Swaziland, Tanzania, and Zambia), more than 75% of allhigh level manpower were expatriates. In all of the countries except Nigeria(39%), Sudan (12%) and Somalia (7%), more than 50% were expatriates. Formiddle-level manpower (occupations requiring a secondary education plus aminimum of 2 years of training), shortages were not quite as severe. Never-theless, in five of the countries listed above, at least 50% of all jobs inthis category were occupied by expatriates.

In terms of occupations, the greatest shortages of high level man-power were for doctors, dentists, engineers, architects, managers, accountants,agronomists, foresters, livestock specialists, and for secondary school teachers,

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particularly teachers of mathematics and-science subjects. The greatest short-ages of middle level manpower were for technicians in all fields, skilledartisans and mechanics, bookkeepers, primary school teachers and for a varietyof specialized vocations in agriculture, industry, business and government.

While the largest percentages of expatriates were employed in highlevel occupations, the absolute numbers were small. On the other hand, thepercentage of expatriates in middle level occupations was small, but given thevery large total employment in this manpower category, their numbers wereenormous.

The manpower surveys and plans, which have now been undertaken byvirtually every country in the region, established the economic justificationfor investments in education sought by economic planners, most of whom wereexpatriates, and by donors. The methodologies used placed clear priorities onsecondary and higher education, on science and mathematics and upon the intro-duction of vocational training into the general school curriculum. They almost Ih

completely discounted the value of further investments in primary educationbecause, in spite of low enrollment ratios, adequate numbers would be forth-coming at this level to provide intakes into secondary education. Moreover,it was argued, given the long period of time between an investment in primaryeducation and any possible resulting increase in income, such investments were"uneconomic" at any reasonable discount rate. The Bank's lending program foreducation in the 1960's and early 1970's in Africa as elsewhere reflected thisbias.

As suggested in the introduction to this paper, few African govern-ments regarded the prescriptions of manpower planners as more than guidelines.With the exceptions of Tanzania and Botswana, all have regarded their manpowerplans as a justification for doing what they intended to do in any event;expand enrollments in secondary and higher education; manpower studies whichsuggested a curtailment of expansion were ignored. One consequence has beentumultuous expansions of enrollments in secondary and higher education farin excess of prospects that all graduates will be employed. With the exceptionof Ivory Coast, which has made significant progress in replacing expatriatesin recent years, and a few countries in Southern Africa, virtually all topgovernment posts and most of the top posts in the parastatals and in the privatesector are now occupied by nationals.

Most countries in Africa are now troubled with a growing and polit-ically volatile group of unemployed secondary school leavers, and severalcountries with prospects that university graduates will soon have difficultiesfinding employment. There are strong pressures for governments to becomeemployers of last resort and many, notably Mali, Ghana and the Central AfricanRepublic have become so with serious consequences for their public financialsituations. Measures are now required in these countries to reduce publicpayrollsi

In spite of the rapid expansion of the education system, growingnumbers of unemployed secondary school leavers and prospects for unemployeduniversity graduates, almost all countries still face the anomaly of rather

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severe high and middle level manpower shortages in the very occupations forwhich shortages existed at independence and, in particular, for managerialand technical manpower. The continuing existence of manpower shortages isattributable to insufficient attention to formal and on-the-job training asopposed to general education, the inadequate numbers of students who receivegood preparation in science and mathematics in preparation for entry into science-based occupations and personnel policies in the public sector which permit andeven encourage rapid rotation of staff, precluding satisfactory on-the-job train-ing through supervision. Because managers responsible for the operation oftraining institutions often fail to maintain sufficient liaison with employers,the skill profiles of trainees frequently fail to meet the requirements of thejobs which are available. Further, novices entering public service, whichtends to dominate modern sector employment in most African countries, oftenhave very little to do and, therefore, little opportunity to improve theirskills, because of insufficient operating budgets. Finally, public sectorsalaries often do not provide sufficient incentives for civil servants to makespecial efforts to advance in their careers or, for that matter, to remainin the civil service. The resolution of these problems should have the highestmanpower development priority during the 1980s.

The training of staff with entirely new occupational profiles for newinstitutions designed to give direct assistance to villagers in a wide varietyof activities such as health, sanitation, agriculture, nutrition and educationwill be another major task during the 1980s. This work is just beginning incountries which have experimented with new institutions with new activities andhave, consequently, gained a sufficient definition of what the associated jobprofiles are.

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IV. EDUCATION AND TRAINING

Educational achievements. The educational achievements of thepopulation in Africa are the lowest in the world. In 1976, about 85 percentof African adults were illiterate. Only Bangladesh (88%), Nepal (81%) andPakistan (79%) and, in the Middle East, Yemen (87%) have comparably highilliteracy rates. All other countries in the world have lower rates. Thelowest rates of illiteracy in the region are in Tanzania (34%) and Somalia(50%) which in the early 1970s assigned adult education a top nationalpriority and mounted innovative military style campaigns to train adults.

Other indicators of educational achievement are enrollment ratiosfor primary, secondary and higher education (Tables 4.1 - 4.3). The ratiosshow that Africa as a whole, nearly two decades after independence, stilllags substantially behind all other regions at all levels of education. How-ever, this does not detract from the region's substantial achievement; overall,the region has improved its position relative to other developing areas andthis is reflected in a comparison of educational growth rates shown in Table4.4.

Table 4.4. ANNUAL AVERAGE GROWTH RATES OF ENROLLMENTS INEDUCATIONAL INSTITUTIONS BY WORLD DEVELOPINGREGIONS: 1960-1976

(Percent)

Primary Secondary Higher Total

Africa 5.7 9.8 10.5 6.2

Latin America 4.8 10.0 10.9 5.9

Asia 3.9 5.0 9.1 4.2

North Africa and 4.9 7.6 8.0 5.4Middle East

In a decade and a half, the region has experienced a veritable explo-sion in educational enrollments with total enrollments rising from about 14million in 1960 to about 39 million in 1976. Enrollment ratios have also risenconsiderably. The percentage of the age group enrolled at the primary levelthroughout Africa rose from about 38 percent in 1960 to about 60 percent in1976; at the secondary level from 4 to 14 percent; and in higher education from0.6 to 1.8 percent.

A number of countries now have reasonable expectations of achievinguniversal primary education during the decade 1980-1990. These include Togo,Kenya, Botswana, Swaziland, Zambia, Gabon, Ivory Coast and Nigeria. On theother hand, in a number of the poorest countries, UPE is not a reasonableexpectation in this century; these include the Sahelian countries of Mauritania,Mali, Niger, Upper Volta and Chad as well as Sierra Leone and Ethiopia. Table4.5 shows the structure of enrollments in the formal education system in 1975.

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Table 4.1 PRIMARY SCHOOL ENROLLXENT RATOS IN AFRICA, 1960-1979;

CURRENT ADULT ILLITERACY RATES

Enrollment CurrentRatios IlliteracyMost recent Rate

1960 1965 1970 Estimate 2

OW INCOMtE AFRICA

Benin 26 35 40 44 89.0

Burundi 18 30 35 23 90.0

Central Aft. Rep. 32 56 69 79

Chad 16 34 35 37 85.0

Comoros 14 25 39 55 80.0

Ethiopia 5 11 17 23 80.0

Gambia 12 21 26 32 90.0

Guinea 30 32 33 28

Kenya 47 54 64 109 60.0

Lesotho 83 94 95 121 60.0

Madagascar 52 65 83 92 50.0

Malawi 63 44 40 61 75.0

Mali 7 16 20 22 90.0

Niger 5 11 *14 17 92.0

Rwanda 49 53 70 58 ~ 7.0

Sierra Leone 23 29 34 35 85.0

Somalia 9 10 .9 58 50.0

Tanzania 24 35 35 57 34.0

Togo 44 55 72 98

Uganda 49 67 61 53

Upper Volta 8 12 13 14

Zaire 60 70 90 86 85.0

4IDDLE INCOME AFRICA

Angola 21 39 70 79

Botswana 36 56 56 85 75.0

Cameroon 65 94 107 111

Cape Verde

Congo, P.R. of 78 114 133 153

Djibouti

Equatorial Guinea 85 91 93 100

Gabon 100. 134 165 193

Ghana 59 79 61 60 70,0

Guinea-Bissau 25 26 44 78

Ivory Coast 46 60 76 86 80.0

Liberia 31 41 53 62

Mauritania 8 13 16 17 83.0

Mauritius 86 87 83 80 20.0

Mozambique 48 37 47 52

Namibia

Nigeria 36 32 34 60

Reunion 128 148 158 132

Rhodesia 98 110 101 99

Sao Tome & Principe

Senegal 27 40 43 53 90.0

Seychelles

South Africa 89 90 96 107

Sudan 25 24 33 40 80.0

Swa:iland 58 74 91 103 50.0

Zambia 48 59 72 96 61.0

Source. World Development Report Estimates.

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Table 4.2. S9CONDARY SCROOL ENROLLMENT RATIOS, 1960-1975

Adjusetd1960 1965 1970 1975

LOW ?NCO-2 APPICA

Benin 2 3 5 11Burundi 1 1 2 3Central Afr. Rep. 1 2 5 8

Chad 0.42 1 2 2

Comoras 1 3 6 13

Ethiopia 1 2 4 6

Gambia 3 6 8 9

Guinea 2 5 13

Kenya 2 4 9 13

Lesotho 3 4 7 14

Madagascar 4 a 11

Malavi 1 2 2 3

Mali 2 1 3 3

Niger 0.29 , 1 1 2

Rwanda 2 2 2 2

Sierra Leone 3 5 9 11Somalia 1 2 4 4

Tanzania 2 2 3 3

Togo 2 5 7 19

Uganda 3 4 6 6

Upper Volta 0.45 1 1 2

Zaire 3 6 9 11

)DDLE INCOME AFRICA

Angola 2 5 9

Botai,ana 1 3 8 16

Cameroon 2 5 9 12

Cape Verde

Congo, P.R. of 4 10 19 46Djibouti

Equatorial Guinea 2 7 17

Gabon 5 11 15 31

Ghana 3 12 11 35

Guinea-Bissau 2 2 6 5

Ivory Coast 2 6 11 17

Liberia 2 5 9 16

Mauritania 0.39 1 2

Mauritius 25 31 37 52

Mozambique 2 3 5

Namibia

Nigeria 3 3 4 10

Reunion 20 32 43 65Rhodesia 6 6 7 9

Sao Tome & Prineipe

Senegal 3 7 11

Seychelles

South Africa 15 15 18

Sudan 3 4 7 11

Swaziland 5 8 19 33Zambia 1 5 12 14

Source: World Development Report Estimates.

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Table 4.3. HIGHER EDUCATION ENROLLMENT RATES, 1960-1975

Number of Students/Population 20-241960 1965 1970 1975

LOW :;CO'r \?FR!CA

Benin 0.02 0.13 0.74

Burundi 0.01 0.07 0.16 0.16

Central Afr. Rep. 0.06 0.21

Chad 0.16

Comoros

Ethiopia 0.05 0.12 0.21 0.28

Gambia

Guinea 0.12 0.58

Kenya 04.4 0.28 0.19 1.02

Lesotho 0.23 0.29 0.45 0.00

Madagascar 0.16 0.64 0.94 1.21

Malavi 0.03 0.26 0.28

Mali 0.04 0.16 0.50

Niger 0.09

Rvanda 0.04 0.18 0.28

Sierra Leone 0.16 0.35 0.50 1.06

Somalia 0.03 0.03 0 38 0.62

Tanzania 0.05 0.17 0.23

Togo 0.05 0.52 1.21

Uganda 0.19 0.28 0.49 0.56

Upper Volta 0.01 0.04 0.15

Zaire 0.06 0.23 0.65 1.00

MIDDLE INCOME AFRICA

Angola

Botswana 0.02 0.14 0.47

Cameroon 0 54

Cape Verde 0.27 0.53 1.19

Congo, P.R. of

Djibouti 0.45 1.08 1.10 2.64

Equatorial Guinea

Gabon 0.42 * 2.29

Ghana 0.24 0.73 0.79 1.09

Guinea-Bissau

Ivory Coast 0.11 0.47 1.18 1.74

Liberia 0.44 0.57 0.83 1.65

Mauritania

Mauritius 0.15 0.18 2.67 1.44

Mozambique 0.08 0.28

Namibia

Nigeria 0.07 0.22 0.30 0.48

Reunion

Rhodesia 0.10 0.22

Sao Tome & Principe

Senegal 0.51 0.91 1.46 2.16

Seychelles

South Africa 3.10 3.75 4.50 4.90

Sudan 0.38 0.68 1.05 1.45

Svw:iland 0.40 1.72

Zambia 0.44 1.11

Source: Wforld Development Report Estimates

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Table 4.4. THE STRUCTURE OF ENROLLMENTS IN AFRICA, 1975

Proportion ofSecondary stu- Ratio ofdents in voca- Secondary to Tertiary totional studies 'Primary Secondar

(Percent) (Percent) (Percent)

West Africa 9 11 5East Africa 7 10 4Central Africa 17 11 4Southern Africa a/ 8 10 2

Source: Unesco Statistical Tables, Africa, December 1977.

Note: a/ Botswana, Lesotho and Swaziland only.

There have been important changes within the structure of enrollmentsbetween different types of education. Contrary to what was hoped in the early1960s, there has been some decline in the proportion of students enrolled intechnical and vocational subjects and in increase in the proportion enrolledin general education. Also, the objective of increasing the proportions ofstudents in secondary and higher education has not been achieved.

Further progress in improving access to education. In the future,progress in expanding enrollments, particularly at the primary school level,will be more difficult than in the past because; (a) schools have already beenestablished in the most accessible, richest areas. What remains is the leastaccessible, poorest areas where, moreover, enthusiasm for education may belower; (b) most governments in Africa, providing education at all levels whichis either free or heavily subsidized, have become financially strapped witheducation claiming the largest share of their budgets. Further progress willrequire financial reform of education and a greater sharing of the costs ofeducation; (c) other priorities are increasing in importance. For example,the rapidly expanding enrollments in the past were usually achieved at a costof declining quality, particularly at the Primary school level where largenumbers of unqualified school teachers have been used. Upgrading the teachingforce, the provision of teaching materials and better logistical support forschools have become objectives of paramount importance.

In the poorest of African countries which have both low enrollmentratios and financially improvident governments, progress in improving accesswill depend upon success in lowering costs, finding alternative means offinancing education, increasing student/teacher ratios, and perhaps, devisinglow cost alternatives to primary education. There have been numberous experi-ments, many assisted by the Bank. Some countries have attempted to helpfinance schools by adding productive activities (Chad, Benin, Botwana). Othershave attempted to find alternative forms of basic education by reformingKoranic schools (Mauritania) or focussing on adolescents in rural areas (Mali,Upper Volta, Benin, Senegal).

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In the 21 low income African countries, women have lower accessto education than in any other other region except low income Asia. However,improvements in income seem to have a significant effect on access for women.In the low income African countries about 38 percent of total primary levelenrollments are women, while in the middle income African countries, about45 percent are women. However, during the period 1960-1975, the access ofwomen to schooling has improved phenomenally in the low income countries;in 1960 only about 28 percent of total primary school enrollments werewomen. The access of women to secondary education in the region, has notimproved significantly since 1960 and, in a number of countries, it may havedeclined.

Efficiency. The quality of education is sometimes measured, rathercrudely, by data or dropout and repetition rates, and percent of teachers whoare unqualified. In Africa, on the average, because of repetition and drop-outs, it requires 10 pupil years to produce 1 primary school graduate in a6-year course. Experience at the university level varies widely. In Nigeriaand Kenya, for example, repetition and drop-out rates are low, while inIvory Coast, they are phenomenally high; in some courses at the Universityof Abidjan, it requires over 10 student years to produce a graduate of athree year course. Much of the problem of repetition in primary schools inAfrica is attributable to high repetition in the last year of school. Givenlimited entry into secondary schools, students in almost every country veryoften elect to repeat the last year to improve their chances on secondaryschool entry examinations.

Teacher quality varies widely in the region and between areas withincountries. The majority of countries have more than 50 percent of their primaryschool teachers unqualified. The situation is significantly better in secondaryschools where there is a heavy reliance on expatriates; in fact, it is notuncommon to find that a majority of teachers at this level are expatriates.The heavy use of expatriate secondary school teachers very largely accountsfor the fact that the region absorbs 75 percent of all technical assistanceavailable worldwide.

The external efficiency of African school systems largely refers totheir ability to satisfy manpower requirements and to the ability of schoolleavers to find jobs. The manpower situation has been discussed in Section II,above. It has also been noted that the problem of unemployed school leavershas assumed serious proportions in some countries and that at least threeGovernments (Mali, Ghana and CAR) have become employers of last resort.

Ronald Dore in a study conducted several years ago, demonstrated themagnitude of the problem by comparing projected modern sector employment growthwith the projected supply of school leavers. The results of his study areshown in Table 4.6.

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Table 4.5. ESTIMATED NEW JOB CREATION AS A PERCENTAGE OFSCHOOL LEAVERS IN SELECTED AFRICAN COUNTRIES,1973 and 1980.

1973 1980Growth in employment Growth in employment

Males 2 per cent 5 per cent 2 per cent 5 per centper annum per annum per annum per annum

Senegal 33 58 24 51Ivory Coast 33 58 22 47Botswana 30 53 17 36Zambia 29 51 23 50Ghana 19 34 21 44Kenya 17 30 15 32Sudan 13 22 10 21

Females

Senegal 17 30 12 26Botswana 6 11 4 8Kenya 4 8 4 8Algeria 4 7 2 5Ghana 3 5 3 6Sudan 3 5 2 5Ivory Coast 2 4 1 2Zambia 1 3 ]. 2

Source: R.P. Dore, J. Humphrey and P. West, The Basic Arithmetic of Employment,(ILO, Geneva, 1970) (mimeo).

Note: New job creation refers to the net increase in formal sector employ-ment on the assumption of a 2 or 5 percent per annum increase in such employment.

Even under optimistic assumptions with respect to both employment (high) andenrollment growth (low), the job situation for school leavers is poor anddeteriorating.

A major result of growing school leaver unemployment is an escalationof minimum entry requirements for jobs and, as a consequence, an increaseddemand for additional years of schooling. The ILO World Employment Program'sstudy of employment in Kenya discusses this unresolved problem in some depth.However, the study underscores that the problems of open unemployment espe-cially among school leavers is no-where near as important as the underemploymentand poverty in the country; unemployed school leavers are a small, but politi-cally troublesome group.

Finance. Improving access to education and its quality in Africa hasbecome severely constrained by the current high costs of operating the existingeducational systems. Of the 34 countries in the region for which the Bankmaintains comparative educational data; 19 committed a larger percentage oftheir GDP to education than the median of all countries (3.9 percent). Benin,

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Botswana, Congo, Ivory Coast, Kenya, Lesalke, Senegal, Zaire and Zambia fallin thefirst quartile (5.1 percent) of all countries, spending more than 5percent of GDP on education; Lesothe spends a phenomenal 12 percent. Withthe excention of 5 of the 34 countries (for which data are available) in theregion, all devote a larger percentage of their national budget to education,than all other developing countries; world-wide, this is about 16 percent.Only Chad (10%), Ethiopia (12.5%), Gambia (11.5%), Liberia (13.2%), Malawi(9.3%) and Somalia (12%) spent less. Benin, Mali, Ivory Coast and Nigeriacommit more than 30 percent of their governments' budgets to education;current plans should escalate this percentage to closer to 40 percent inNigeria and Ivory Coast.

Unit costs in Africa, as a percent of GDP per capita are, by far,the highest in the world, as shown in Table 4.7.

Table 4.6. UNIT COSTS AS A PERCENT OF GDP PER CAPITA

Region Primary Secondary Higher

Eastern Africa 20 124 927

Western Africa 24 142 1,405

Asia 11 27 205

EMENA 15 47 306

Latin America 11 22 121

Source: IBRD Education Sector Policy Paper.

Unit Costs as a Percent of GDP Per Capita in Africa has clearly becom'efar more burdensome on individuals, national economies and on governments thanin other regions.

The unit costs of education are high not only relative to GDP percapita, but in absolute terms. In terms of capital and recurrent costs perstudent, African governments spend at levels normally associated with countrieswhich have per capita incomes which are at least 3 and as much as 8 times higher.The reasons for these high costs are several: (a) the use of educational techno-logies which tend to be relatively fixed, requiring the use of comparable inputsat all levels of income; (b) high teacher's salaries which comprise up to 90 per-cent of the recurrent costs of education; (c) high capital costs which are aconsequence of attempts to maintain European standards of buildings and equipment;(d) the prevelance of poorly developed and inefficient construction industry; (a)high transportation costs; (f) the use of boarding facilities at levels of educ-ation above primary school. The attempt to meet these standards results in thehigh cost importation of building materials and equipment. Attempts to reducecosts will require a concerted effort in all of these areas, and, in particular,on the costs of teachers per student. Problems of financing education in Africathreaten to become much worse before the end of the century because, unlike therest of the world, population growth rates in the region continue to increase.Simply to retain the low enrollment ratios of 1980, most countries will have tomore than double total enrollments by the end of the century.

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Administration and Management. Like the public service in general,the management of Africa's school systems is weak. Essential data for decision-making are often years out of date, if not totally lacking; ministries are notproperly staffed and lack operating funds, and; both morale and discipline aretypically poor. Weak from the outset, education administrations have been ableto cope with the tumultuous development, and later management, of very largeschool systems. Bank project experience in the region shows that educationministries have great difficulties preparing and later, implementing, projects.Improvement will involve not only more training for staff in all occupations,especially managers, but reform in general government personnel policies,reorganization, and a better funding of operations.

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V. HEALTH AND POPULATION

Like other indicators of human resource development, data on healthshow that Africans have the poorest health in the world. What is more, theyappear to be losing ground relative to the populations of other regions interms of rates of improvement. This is reflected in existing crude deathrates and their rates of decline since 1950/55.

Table 5.1 CRUDE DEATH RATES PER 1,000 POPULATION

1950/55 - 1970/75

Crude Death RatesPercent Decline

1970-75 1950/55-1970/75

Eastern Africa 20.7 27.2Middle Africa 21.7 23.6Western Africa 23.0 19.9Southern Africa 16.2 12.0EMENA 15.2 35.6South Africa 16.1 33.2South America 9.2 36.5All developing countries 14.3 38.6

Sources: United Nations, Department of Economic and Social Affairs,World Population Prospects as Assessed in 1973, Population StudiesNo. 60, 1977; Jacques Vallin, "World Trends in Infant MortalitySince 1950," World Health Statistics Report, Vol. 29, No. 11, 1976;Tim Dyson, "Levels, Trends, Differentials and Causes of ChildMortality - A Survey," World Health Statistics Report, Vol. 30, No. 4,1977.

Not only does the region have the highest death rates, but they have declinedless in recent years than they have in other regions. The high mortalityrates are reflected in more detailed indicators of health in Table 5.2.

Table 5.2 MEASURES OF HEALTH IN LESS DEVELOPED REGIONS, 1970/75

Life exp. Infant mort. Mort.at birth per 1000 ages 1-4 CDR(years) live births per 1000 per 1000

Tropical Africa 41 200 40 22Northern Africa 52 150 26 15Western South Asia 54 135 22 14Middle South Asia 48 145 25 17Eastern South Asia 51 120 18 15East Asia 61 70 7 10Caribbean 63 64 7 9Tropical South America 61 100 10 9Middle America 62 70 9 9

Source: United Nations, op cit.

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In terms of life expectancy at birth, infant mortality per 1000 live birthsand child mortality, these indicators show that Africans are substantiallyworse off than the people in the less-developed countries of any otherregion.

These measures are, of course, averages. The data for the countriesin the Sahel reflect health conditions which are substantially worse. InMali, for example, the crude death rate is about 30 per 1000, life expectancyis 37 years and the infant mortality rate is about 188 per 1,000 live births.

The principal cause of death in Africa is malaria to which childrenunder 5 years are particularly vulnerable. Without medication programs, asmany as 80 percent of the children in an area can be infected. However, withpublic medication programs, this incidence has been reduced to 10 percent andless.

Intestinal diseases, while especially common, are often not reported.Where water supplies and sanitation are not secure, most of the populationcan be infected. Intestinal diseases account for about 30 percent of alldeaths, with amebic and vacillary dysentary the major causes of loss of timefrom work among adults. Control of dysentary and intestinal parasites willdepend upon changing the behavioral patterns affecting sanitation.

Measles, tragically, is the main killer of small children; it istragic because it is easily prevented, the main constraint being technical,the maintenance of an appropriate temperature range for the vaccine. Mortali-ty from measles can also significantly be reduced with better child nutrition.

Tetanus is highly prevalent and is a particularly acute problemfor women and children at childbirth. Tuberculosis is a major threat tohealth, although it has probably received more attention than other diseases.Locally, guinea worm, polioniyelitis, meningitis, shistosomaisis and trypano-somiasis can be extremely serious threats to health. Onchocerciosis, primarilyprevalent in a small area in West Africa, provides that area, agriculturallyone of Africa's most fertile- with the highest incidence of blindness in theworld.

Morbidity and mortality attributable to infectious diseases andnutritional status are closely linked. The undernourishment of large segmentsof the African population, mostly in rural areas, reduces their resistanceto disease and serves to increase morbidity and mortality rates.

African health services. Generally, the region's governments havenot given the same attention to health as they have to education. In 22countries for which data are available, government expenditures as a percentof the total budget averaged only 5.5 percent. In 1975, Malawi committedthe largest portion of its budget to health and Gabon, only 1.6 percent (whichstill provided Gabon's'population with the largest per capita expenditure).Table 5.3 shows the range of expenditures on health in selected countries.In examining these data, it should be noted that Western European countriesand the U.S. allocate very nearly $1,700 per capita to health. The averagefor Africa of both public and private expenditures is almost certainly some-what less than US$10.

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This level of per capita expenditures will not support the sametype of health services as are prevalent in the developed countries ofEurope and North America; nor would these services be appropriate evenif they could be afforded. In Europe, health programs are based on treat-ment by physicians of biological disorders and health policy is overwhelminglydirected toward the establishment of curative facilities, the training ofpersonnel to man them and toward biological research. The European systemreflects the historical amelioration, through development, of the environmentalcultural, economic and demographic causes of ill health. The system has nowbecome highly specialized for the cure of exceptional illnesses and theprevention of diseases mostly attributable to affluence, industrial pollutionand old age. Unfortunately, most African countries have European type systemswhere, often, hospitals and their staff, located primarily in the large towns,absorb almost all of the governments' health budgets. In 1975, a singlehospital in Liberia absorbed more than 50 percent of the government's healthbudget. These services are largely curative and do not reach very manypeople.

It is not always true that the current African system of healthcare was imposed by the former colonial governments; some simply developedalong European lines after independence. Among African colonial powers,the French, with the Germans and the Belgians, long ago recognized thatEuropean medicine could not be transplanted into Africa and, as early as1917, cooperated in the establishment of an international program whichthey believed to be better adapted, first against trypanosomiasis. Between1917 and the gaining of independence by African countries in the early1960s, this program developed through successive reorganizations to includevaccination against other diseases, treatment and health education. Thesystem, which is still in existence in some countries under the name ofl'Organisation de Cooperation et de Coordination pour la Lutte contre lesGrandes Endemies, was characterized by its low cost, its strong orientationtoward preventive medicine, mobile as opposed to fixed base services andautonomy vis-a-vis the colonial administration. During the colonial period,curative services developed independently of the Grandes Endemies; however,the curative services experienced their greatest growth after independencewhile the Lutte contre les Grandes Endemies suffered a decline. In short,the French, German and Belgian colonial powers did not impose a completelyinappropriate public health system in their colonies; the growing dominanceof fixed base curative services is a consequence of unbalanced developmentsince independence.

The major constraints on the establishment of a village basedhealth service in Africa are the scarcity of high and middle level manpower,finance and, decreasingly, the strong orientation of senior health officialsin many countries toward western-type medicine. Further, it is usuallydifficult to provide sufficient incentives for health staff, particularlyphysicians, to work under rural conditions which are often harsh.

The high level manpower required in an African health system wouldlargely consist of physicians who, in a village-based system, would performsupervisory training and diagnostic roles. Many of the physicians nowpractising would require retraining to perform these roles. Actual treatmentand village level extension services would be the responsibilities of subor-dinate paramedicals.

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The data for Africa underscores the need to relieve physicians ofmany of their traditional curative activities to enable their knowledge tobe applied more extensively. Table 5.4 shows the ratios of population tophysicians for the period 1960-1975. With few exceptions, these are by farthe highest ratios in the world. The time series reflect first the growthin population and second, in many countries, the employment of the firstgraduates from medical schools established after independence. Thus, inmany countries, the ratios increased until 1970, and thereafter declined.Some countries -- Benin, Tanzania, Cuinea, Kenya, Lesotho, Uganda, Angola,Botswana, Congo, Somalia and Swaziland currently have higher ratios thanin 1960, although the Kenya ratio is now beginning to decline because ofincreases in medical school graduates. Overall, since independence theregion has not made much progress in satisfying the need for physicians andmedical schools with appropriate curricula deserve very high priority inthe investment programs, of most African countries.

Institution building for village-based rural health services. Therehas now been a considerable amount of experimentation with village basedservices in Africa, most notably in Mali where WHO and USAID have establishedpilot schemes, in Northern Nigeria where Ahmadu Bello University has providedleadership, in Kenya, and in Tanzania. The lessons learned from theseexperiments are:

(a) While the main focus of attention for village-based health careshould be preventive, it should not be divorced from the curativeservices.

(b) Good communications and strong logistical support is required forrural services which are essentially educationally oriented.

(c) Priority should be given to instructing women of child bearing ageon child care, nutrition and family planning.

(d) The instruction of all villagers and investments in sanitation arecrucial to good health.

(e) A major purpose of providing cleaner water to villagers is torelieve women of the need to carry it, sometimes for great distances.Similarly, better child care and nutrition depends upon relievingwomen of some of their burdens in carrying wood and milling grain.

(f) Attention must be given to changes in the division of labor and thewelfare of individual family members which might result from newcash cropping schemes. These schemes can diminish the welfare ofwomen and children.

(g) Improved health in Africa will be best achieved through a varietyof policy interventions, most of which do not involve ministriesof health. Because of the complementarities of these interventions,a close coordination among government services is required. ChartI outlines the interrelationships of these interventions.

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Table 5.3. Population Per Physician, 1960-1975

1960 1965 1970 Most Recent Estimate

LOW "TCCYC k"(7A.

Benin 240.00 313.00 320.24 369.71

Burundi 660.00 563.20 600.00 486.49

Central Afr. Rep. 336.50 317.20 383.33 270.97

Chad 560.00 733.30 603.17 443.82

Comoros 150.00 169.00 142.11 138.10

Ethiopia 960.00 685.20 733.04

Gambia 160.00 220.00 189.47

Guinea 206.10 420.70 497.40 223.94

Kenya 110.00 128.20 324.17 162.92

Lesotho 180.00 258.20 250.00 204.00

Madagascar 94.00 105.40 98.54

Malawi 350.00 492.50 379.82

Kali 390.00 414.52

Niger 650.00 647.40 598.55 411.01

Rwanda 762.00 627.87 535.06

Sierra Leone 220.00 164.40 171.14

Somalia 300.00 363.90 187.25 155.44

Tanzania .160.00 .182.40 215.65 275.72

Togo 340.00 271.00 297.06 212.00

Uganda 159.00 116.00 95.12 206.85

Upper Volta 760.00 634.70 927.59 595.95

Zaire 630.00 312.50 293.40 288.02

MIDDLE INCOME AFRICA

Angola 130.00 131.40 83.54 154.04

Botswana 93.00 208.80 158.54 104.76

Cameroon 290.00 339.50 259.56

Cape Verde 140.00 88.00 192.30

Congo, P.R. of 150.00 116.40 85.71 61.73

Djibouti

Equatorial Guinea 59.00 51.30 116.00

Gabon 66.00 58.60 52.08

Ghana 210.00 133.10 123.92 112.27

Guinea-Bissau 154.10 176.67

Ivory Coast 190.80 138.59

Liberia 160.00 115.70 104.55 125.76

Mauritania 260.00 300.00 172.06 177.46

Mauritius .45.00 38.60 38.86

Mozambique 190.00 179.90 163,.92

Namibia

Nigeria 270.00 442.30 434.69 254.63

Reunion 35.00 30.20 20.54 19.83

Rhodesia 62.00 75.70 65.79 57.00

Sao Tome & Principe 80.00 30.50 38.52 66.66

Senegal 210.00 187.60 149.43 140.92

Seychelles 34.00 40.00 31.25

South Africa 20.00 15.00 21.33 20.16

Sudan 290.00 307.20 137.76 123.71

Swaziland 76.00 75.00 78.85 88.88

Zambia 92.00 218.20 81.59

Source: World Development Report Data.

Chart I - Links Between Major Biological, Social and Economic Problems and Associated Policy Interventions in Africa

PfL1 T_ VVNTT5 M A1. f SOCTA1 AWn WE=! C PROBIZed

BEUTI CARE

1. Vaceination Program against measst

-easles L ladeptive Health2. Medication program against malar care practice3. Medica'ion urogram against some

a.-tro-intesrinal infecttons H4. Maternities and child care cente a aptive Social Practice

(a) Family Planningd Eonoic Organition

VATER AND SANITATION

Icastro-latestinal,1. Investments in vell=2. Investments In latrines and aeverage systems _aahdaptive agricultural

EF _ alnutritton =Prcleng and DevelopmentAGRICULTURE Poltes

1. Improved farmer prices2. Garden crops and poultry raising projecta r caprEa

for women High Morbidity emDng children Low lncomes3. Consu-mer and producer cooperatives profits High Mortality among cbildren.

may finance:(a) Maternities and staff _(b) Subsidized drugs and contreceptives

EDUCATIO4 AND TRAINING

1. Training of village health workera(a) sanitation

(b) 3tgh Y;rttlty ratee(c) nutrition 8tgh Dependeny rates(d) simple medication programa e.g., againtt malaria(e) family planning

2. Paramedics as extenaLon vorkers

3. Iedical technicians

flftER

1. Low cost devices to relieve vomen of vork loads its 8igh Pobliation Growth ratesraising water from wells. milling grain and usingwood in cooking.

2. Beform of drug diatribution system.

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VI. THE ROLE OF THE BANK IN HUMAN RESOURCE DEVELOPMENT

Summary of Prior Activities in Africa. The Bank's assistance to Africancountries in the area of human resources has been predominantly to further thedevelopment of the formal education system. Until the mid-1970s priority wasgiven to activities which would ameliorate scarcities of high and middle levelmanpower, i.e. to secondary education, technical and vocational training andprimary and secondary teacher training. Beginning in the mid-1970s, the Bankbegan to give serious consideration to primary and nonformal education andestablished several innovative pilot projects in Ethiopia, Mali, Upper Volta,Benin, Senegal and Chad. While firm conclusions cannot yet be drawn fromthese projects which would serve as a basis for their replication elsewhere,initial evidence suggests that projects of this type are difficult to implementand more expensive and less effective than was anticipated.

Also, beginning in the mid-1970s, the Bank began to consider a rolefor project related training, primarily as a consequence of experience whichshowed that projects in railways, roads, ports, electric power and agriculturerequired associated manpower training if they were to be fully effective.Lending for project related training has since become sizeable. Experience hasshown that project related training can be a very efficient way of relievingmanpower shortages because curricula are designed to meet specific employerneeds, training is financed by employers and is regarded as part of overallstaff development programs. Most importantly, there is virtually no danger ofa wasteful overproduction of skilled workers.

While the Bank conducted a health sector survey in Mali in 1978 inanticipation of a free standing health project, investments in health serviceshave taken place only as minor components of agricultural projects and asformal training components of education projects. The exception is the Bank'sparticipation with a consortium of donors in an onchosclerosis program in WestAfrica. The functional literacy program in Mali is also an exception; thiseducation project trains adolescents to become functionally literate as villagehealth workers and is an important experiment in the type of paramedicaltraining required in the region. Little effort has been made in projects toreach women with the kinds of information and assistance they require forimproved maternal health, child care, family planning or nutrition. No efforthas been made in Bank projects to reduce the work load of women (except inprovision of water) or to assist them with improving their traditional acti-vities in poultry raising, cultivation of non-staple components in their dietsor in marketing.

Historically, efforts to improve public administration have generallybeen confined to fellowships in projects for training government staff; littleattempt has been made to evaluate their effectiveness in achieving projectobjectives. More recently, concerted efforts have been made in some projectsand in some sectors to improving administration in selected ministries andparastatals. For example, the second education project in Liberia provided fora systematic reorganization of the Ministry of Education and for the trainingof Ministry staff. In Senegal, in two projects, one of which is a technicalassistance project, efforts are being made to improve administration andmanagement of both government ministries and of parastatals. Throughout theregion attention is increasingly being given in railway, highway, ports,electricity, water and agricultural projects to improving the management ofparastatals, or the government ministry which is responsible for the activity

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being assisted. However, these efforts have not been completely successfulbecause, generally, too little attention was given to their preparation asrelatively small components of large projects.

A sector approach to the improvement of management and publicadministration in agriculture has been initiated in West Africa, beginningwith a regional study of agricultural management and administration and theestablishment, in Nigeria, of an agricultural Management Training Schoolassisted by a Bank project. Although results will not be available for severalyears, these efforts are novel and appear to be in the right direction.

Future Strateay. A human resource strategy for the Bank in Africahas thus been slowly evolving. The essential features of the emerging strategyare:

(a) The strengthening of public administration and managementthrough training and reorganization to make government andparastatals more effective in preparing and 'implementingtheir development programs.

(b) Increased attention to the development of village or localarea based institutions for basic education, health,agricultural improvement, water supplies and sanitation.

(c) Training the manpower required to operate and managevillage based institutions.

(d) Increased attention to primary education, primary teachertraining, technical education and science and mathematicsat all levels.

(e) Increased attention to the implications of recurrent costsin project identification and for project design.

While the emergence of this strategy appears immutable, it is not oneto which the Bank is accustomed, nor will it be easily implementable. First,projects are likely to be generally smaller in the amount of total lendinginvolved. Second, projects will require a type of expertise which the Bankdoes not have, particularly in public administration, management and health.Third, projects will require a level of cooperation not only between governmentministries, but also between Bank project divisions to which both are un-accustomed. In Africa, at least, programs divisions of the Bank will acquirenew responsibilities for project coordination. Fourth, project supervisionwill be difficult because it will be intensive and, moreover, may require theparticipation of two or more project divisions which would create newmanagement problems. Fifth, the political sensitivity of projects will increaseand hence, the Bank's exposure.

PART III

HUMAN DEVELOPMENT IN SOUTH ASIA

Prepared by: Roger Grawe, Indian Division, South Asia Programs Department

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Table of Contents

Page No.

Introduction . ................................................... 99

The Environment for Human Resource Developmentin South Asia ........... ..................................... 101

Economy Wide Issues in Human Resource Development .... .......... 119

Internal Efficiency in the Delivery of HumanResource Services ............................................ 130

Programs and Policy Alternatives ............................... 134

Table 1. Population Characteristics ........................... 102Table 2. Population by the Year 2000 .......................... 102Table 3. Illustrative Projections of Privacy School Age

Cohorts and Women of Childbearing Age - 2000 .... ..... 104Table 4. Sex Ratios ........................................... 105Table 5. Enrollment Ratios .................................... 106Table 6. Education Parameters ................................. 109Table 7. Statewide Literacy Rates for India, 1971 .... ......... 110Table 8. Age Distribution of Literacy,

India and Bangladesh ................................. 111Table 9. Ratio of Secondary to Primary Enrollment Ratios ..... 112Table 10. Health Status Indicators ............................. 114Table 11. Major Causes of Death ................................ 115Table 12. Population - Health Service Ratios .... ............... 117Table 13. Rates of Return to Education ......................... 119Table 14. Unemployment Rates by Status of Education .... ........ 120Table 15. Percentage Distribution of Usual Activity .... ........ 125Table 16 Rural Bangladesh: Sources of Household Income .... ... 126Table 17. Participation Rates in Primary Education by

Income Class ......................................... 128Table 18. Ratios of Educational Expenditures per

Student by Level ..................................... 131

Introduction

The development of South Asia is unquestionably a problem of effec-tive human resource utilization.' Of the mid-1977 population of almost 1.3billion persons in low-income countries (those having per-capita GDP's lessthan $300) two out of every three lived in South Asia. Indeed three-quartersof these lived in India alone. Furthermore the population of South Asiarepresents the world's largest concentration of the poor. Average per-capitaincome in the region reached only $147 in 1977 and an estimated range of 450-500 million peo le lived in households characterized by per-capita incomelevels less than 70 in current prices. While recognizing that effectivehuman resource utilization is primarily a matter of improving productivityand income generation, governments in South Asia have also focussed on directlyimproving the nutritional, health and educational status of the poor who areseverely disadvantaged in each of these areas. Such efforts are intended bothto raise living standards and to develop greater earning capacity. This paperaddresses two broad dimensions of that challenge: (i) the scope and charac-teristics of the human resource condition in South Asia and (ii) specialpolicies and programs for human resource development that have been adoptedor proposed in various countries of the region.

Prior to the detailed analysis, an important consideration is theeconomic environment in which human resource development is pursued. Not onlyare absolute levels of per-capita income low in South Asia but growth perform-ance has also been disappointing with a regional average growth rate of 1.2%per annum between 1960 and 1977 in per-capita income. While the relationshipbetween human resource development and economic growth is not a topic that canbe adequately or even appropriately discussed in the context of this paper,South Asian experience does point-up important aspects of the relationship.Human resource development encompasses elements of both consumpt,ion andinvestment. High levels of consumption of education and health servicesare generally associated with quite high income levels, both cross-sectionallyacross individuals within countries and across country aggregates. 1/ To theextent that consumption of education and health services are desired outcomesof the economic growth process and that South Asian countries will be severaldecades in reaching per-capita income levels associated with the averagelevels of educational attainment and health status attained by middle-incomecountries, there is a strong case for direct welfare-improving investment inhuman resources. Experience in Sri Lanka and Kerala suggests that the attain-ment of high levels of welfare as measured by the consumption of education and

1/ For example in 1975 the South Asia region had an adult literacy,rate of35% and a life expectancy at birth of 50 years (both comparable to theaverages for all low income countries) while middle-income countriesaveraged 69% and 60 years respectively at an average income level almost8 times that of South Asia.

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health services is not contingent on the prior attainment of high incomelevels. 1/

It must also be stressed that effective human resource utilizationis an important concomitant of any human development strategy. Effectiveutilization ties the consumption of education and health services to higherlevels of productivity in either the formal or non-formal sectors. Theseconditions can only occur in an economy with relatively rapidly expandingeconomic opportunities. Here the record of South Asian countries is uniformlydiscouraging. Not only is open unemployment a serious problem with estimatedrates ranging from 30% in Bangladesh, 20% in Sri Lanka to somewhat less than10% in India, but low productivity is evidenced by the large number of full-time participants in the labor force earning substantially less than theminimum subsistence level of income. Human resource development in South Asiamust therefore be complementary with more rapid economic growth even if it isviewed as a direct welfare-improving activity. 2/

This association with growth oriented policies and the very limitedresources for growth in South Asia require that human resource development beundertaken in the most cost-effective manner possible and that programs betargetted as accurately as possible. In the face of these constraints govern-ments in South Asia have responded with innovative approaches in some sectorswhile retaining over-ambitious objectives matched by underfunded, understaffedprograms in other sectors. A major focus of this analysis, therefore, will beto supplement the description of the environment for human resource developmentin South Asia with a review of important education, nutrition and healthprograms (either planned or actually in implementation) and policies. In thiscontext the examples of Kerala and Sri Lanka may again be cited in support ofthe potential compatibility of growth and human resource development. Bothexperienced rates of per-capita income growth above the average for the

1/ In terms of the basic indicators cited in footnote 1 Sri Lanka had anadult literacy rate of 78% in 1975 and a life expectancy at birth of 69years, both considerably above the average for middle-income countries.

2/ Of course, there are many reasons to advocate investment in humanresources as itself an important determinant of the growth processcontributing directly to the alleviation of poverty: these willreceive more detailed treatment below.

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region as a whole during the past two decades. 1/ The consideration ofcurrent programs and policies should indicate prospects for replicating thisexperience not only in the remainder of South Asia but in other low-incomecountries as well.

The remainder of this paper will be divided into four parts: thefirst will describe the basic demographic and human resource environment ofthe region. The second will deal with economy-wide or "macro" issues ofhuman resource development in South Asia while the third part will focus on"micro" issues affecting the internal efficiency of human resource develop-ment programs. The final section will, return to the issues raised in thisintroduction concerning the role that human resource development can playin South Asia.

The Environment for Human Resource Development in South Asia

The structural characteristics of the population play an importantrole in determining the stock of potential human resources and the compositionof demand for services in health and education. Demographic aggregates are ofdaunting magnitude in South Asia. By mid-1980 an estimated 896 million peoplewill live in the sub-continent from Pakistan to Burma. As indicated in Table1 almost 75% of this total live in India with another 19% in Bangladesh andPakistan.

1/ Sri Lanka's growth rate between 1960 and 1977 averaged 2.0% per annumand Kerala's 1.4% compared to 1.2% for the region. Growth performancein Sri Lanka has however declined considerably during the 1970s fromover 3.0% per-capita in the late 1960s to approximately 1.0% between1970 and 1976. While Sri Lanka's commitment to an extensive programof health, education, and other services may have inhibited a moretimely adjustment to the international environment of the 1970s, it isprobable that that adjustment could have been made without significantsetback to Sri Lanka's human resource development objectives. Kerala, ofcourse, operates within the framework of the sluggish Indian economy sothat international comparisons are not strictly appropriate. However,Kerala does rank 5th among Indian states in per capita income growth overthis period. Kerala's growth may also be understated in ways which relatedirectly to the role of human resource development as Kerala hasserved as a source of educated manpower, particularly in the healthsector, throughout India and more recently in the Persian Gulf area.Remittances to the state have played an important role in raisingwelfare levels but have not been captured in conventional state GDPaccounting.

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Table 1

Population Characteristics of the South Asia Region

Country Population Average Growth Rate Selected Ratiosest. 1980 1970-77 Female/Male Dependency Urban

India 663 2.1 .926 .45 .21Bangladesh 89 2.5 .925 .49 .09Pakistan 81 3.1 .865 .50 .26Burma 34 2.2 n.a. .45 .25Sri Lanka 15 1.7 .955 .42 .24Nepal 14 2.2 .987 .45 .04

Source: Statistical Annex, World Development Report, 1979

With a population growth rate of 2.2% per annum an average of 20 millionindividuals a year are added to the regional total. On the basis of projec-tions of current demographic patterns South Asia will have a populationof almost 1.3 billion people by the year 2000. The country breakdown andimplied population growth rates during the next twenty years are indicatedbelow:

Table 2

Population in South Asia by the Year 2000

Population, millions Implied Growth Rate2000 2000* 1980-2000, %

India 973 947 1.5Bangladesh 145 142 2.5Pakistan 139 135 2.7Burma 51 49 2.0Sri Lanka 21 20 1.7Nepal 23 22 .2.3

Source: WDR, 1979

* Alternative projections based on moderately more successfulfamily planning activities reducing growth rates by only 0.1percentage point. The major impact is made in India which mustimplement more effective population activities from an alreadyreduced growth rate. Nevertheless India is expected to makerelatively greater progress.

The impact of this growth on the demand for education and health servicesis the equivalent of adding to the region another India populated exclusivelyby individuals from preschool and school age through those forming newfamilies, the very ages for which the potential demand for maternal and childhealth services is greatest. These projections represent little decline inthe population growth rates achieved during the 1970s. Moderately greater

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success in family planning efforts (yielding an average reduction in growthrates of 0.1 percentage point) could make a difference to the region of almost40 million individuals (see starred column in Table 2).

While precise effects of population growth on the age structure ofthe population will depend on the relative contribution of fertility andmortality trends, some likely trends in the demand for education and healthservices can be indicated. Over the next twenty years, declining populationgrowth rates are likely to have the greatest impact on the demand for primaryeducation services as successive primary school age cohorts stabilize oractually decline in size. In contrast most women of child-bearing age overthe next twenty years have already been born. This, in combination with therelatively young age structure of South Asia's population, means that thedemand for basic health services, most importantly maternal and child health,will increase considerably faster than total population growth between 1980and 2000. Illustrative calculations are indicated for the three majorcountries of the region in Table 3. 1/

1/ The parameters of these estimates are the same for the smaller countries.Reasonably rapid decline in the population growth rate will have astabilizing effect on the primary school age within a very few years;however, past rapid rates of growth associated with a young age distri-bution (see Table 1) will inevitably result in rapid growth of the cohortof women of childbearing age. Of the smaller countries, Nepal is clearlymost vulnerable on both counts with only a slight projected decline inpopulation growth rates and an exceptionally young current age-distribution.Nepal will have to face rapidly expanding demand for both education andhealth services just on the basis of demographic trends alone. Sri Lankais best placed at the opposite end of the spectrum, with little demographicpressure on either count. Burma follows, broadly, the demographic patternof the larger countries, with considerably more demographic pressure inhealth than in education.

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Table 3

Illustrative Projections of Primary School Age Cohortsand Women of Childbearing Age - 2000

Primary School Population Growth Rate Women of Child- Growth Rate(Ages 509, millions) (% p.a.) bearing Age-2000 (% p.a.)1980 est. 2000 1980-2000 (millions) 1980-2000

India 87 106 1.0 231 1.9Bangladesh 13 18 1.6 36 3.0Pakistan 13 21 2.4 36 3.8

Sources: India - R. Cassen in Population & Development Review, Vol. 2, No. 1Bangladesh - World Bank Reports 2323-BD and 2037a-BDPakistan - World Bank Report 2394-PAK

Note: Figures in the various sources are not necessarily comparable to WDRpopulation projections, in terms of time span, age-groups, and moreimportant, underlying fertility and mortality assumptions. Adjustmentshave been made to facilitate comparison but the estimates remain onlyillustrative.

To the extent that such projections are at all useful they illustratesignificant differences among countries in the relative burdens of respondingto future demands for human resource investment. The likely demands on India'sprimary education system are large in magnitude (19 million additional placesby 2000) but represent an increment of little more than 20% over existing"demand". In the case of Bangladesh this increment amounts to almost 40% andfor Pakistan, over 60%. Similar disparities exist in the anticipated demandfor the expansion of maternal and child health facilities, with India havingto keep only a little ahead of overall population growth while Bangladesh andPakistan, in particular, will face quite rapidly expanding demand. 1/

Another dimension of population structure in South Asia withimportant implications for human resource development concerns the low sexratios in several countries. These are reported in Table 1 and indicateconsiderable variation across the Region. While the sex ratio (here takento be the ratio of females to males) at birth is approximately .93, a dif-ferential pattern of mortality in most countries results in sex-ratios rapidlyapproaching or indeed exceeding parity. In South Asia the opposite results:7 days after birth the sex ratio of mortality has been estimated to approach

1/ The rapid growth in the number of women of childbearing age in Pakistanis due primarily to this category being particularly depressed in thecurrent sex-age structure of the population (the female/male ratioages 15-49 was .889 in the adjusted 1972 population estimates.With relatively high population growth rates in the 1970s and early1980s and projected improvements in mortality throughout the period,a "bulge" in the age-structure results by 2000, with obvious feedbackon the growth of school-age population.

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1.2 and it remains-considerably above 1 through the age group 25-34 years. I/Moreover this situation appears to culminate a marked decline in the relativesurvival rates of women in South Asia which apparently commenced as early as1900.

Table 4

Sex Ratios for the Indian Sub-continent from 1871/72

1871 81 91 01 11 21 31 41 51 61 71

South Asia 940 954 958 963 954 945 940 930India 955 950 945 946 941 930Pakistan 856 863 861Bangladesh 925

India States,selectedAndhra Pradesh 993 987 980 986 981 977Madhya Pradesh 974 973 970 967 953 941'Tamil Nadu 1,029 1,027 1,012 1,007 992 978Kerala 1,011 1,022 1,027 1,028 1,022 1,016West Bengal 905 890 852 865 878 891Uttar Pradesh 909 904 907 910 909 879Punjab & Harya 821 830 850 858 864 864Maharashtra 950 947 949 941 936 930

Source: A. Mitra,, Implications of India's Declining Sex Ratio, New Delhi 1979

Although these data are unadjusted for migration, they are consistentwith mortality evidence cited above and imply very little improvement, if notactually deterioration, in the circumstances of women in South Asia. Theorientation of government services and programs that contributes to thissituation will be addressed below, but this aspect of the demographic environ-ment illustrates the entrenched biases against women in the South Asia environ-ment. Inadequate attention to the health needs of girls and women will resultin persistently'high rates of infant mortality; furthermore, low social valuewill continue to be attached to the education of women as their ultimate earn-ing capacity and economic contribution continues to be undermined by repeatedpregnancies and greater likelihood of early death. Statewise evidence fromIndia and the comparison with Sri Lanka'support the general importance accordedthe sex ratio in relation to general human resource development. 2/

1/ Evidence on these points is brought together by Asok Mitra, Implicationsof the Declining Sex Ratio in India's Population, New Delhi 1979.

2/ In this regard a caveat concerning Nepal should be mentioned, in thatNepal while having low indicators of human resource development, hasthe highest sex ratio. This may reflect general equality in the distri-bution of the very inadequate level of health services.

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Research conducted by the Indian Council of Medical Research revealsthat 70% of pregnant women in India suffer from anaemia which has provedresistant to extremely high dosages of iron, folic acid, and vitamin B12.Chronic malnutrition, poor drinking water and lack of adequate sanitationare blamed for the resilience of anaemia. This condition contributes toIndia's extremely high rates of maternal mortality estimated to be 573per 100,000 livebirths in 1968 compared to an extimate for Sri Lanka of300 in 1962. Women also suffer differentially higher mortality from themajor illnesses related to generally low health standards such as gastro-enteritis, bronchiopneumonia, avitaminosis and other dietary deficiencies.

A final structural aspect of the demographic environment in SouthAsia is spatial distribution including the rural-urban split. Four out offive residents in South Asia live in rural areas, ranging from a low of 75%in Pakistan to 91% in Bangladesh and 96% in Nepal. With this overwhelminglyrural disposition of the population it is nevertheless still true that humanresource development has proceeded with a pronounced urban bias. In Indiafor example literacy rates in 1971 were 120% higher in urban areas than rural;in Bangladesh, 100% higher in 1974. The differential was even greater withregard to female literacy: 220% higher in urban versus rural India and150% in Bangladesh.

Similar differentials exist in the case of health outcomes. Forexample, infant mortality rates are only about 70% as high in urban areas ofIndia and Pakistan as in the rural areas. In the provision of health servicesthe disparities are even greater with roughly 8 times as many hospital bedsin urban areas as in rural areas. Numerous studies document the inversecorrelation between remoteness and adequate staffing of even existing facili-ties. There are special problems of remoteness and accessibility in almostall South Asian countries. In India, the tribal population which is concen-trated in remote areas, constitutes nearly 7% of the population or over 46million people. While conditions vary regionally these groups suffer specialdisadvantages due to lack of access to both education and health services.Many tribals lack even the necessary economic base to provide food for morethan 200-250 days throughout the year. An analogous situation obtains inNepal where over 60% of the population lives in the hill regions where thereare very difficult problems of access. In Pakistan, Bangladesh and India aninadequate network of roads is a major obstacle to the delivery of services,particularly in the monsoon season. In India, for example, it is estimatedthat almost 10% of the half-million villages are without road connection tothe outside world. Such isolation severely limits appropriate deliverysystems for human resource development.

Equally severe problems of accessibility can exist within a village,as large numbers of individuals nominally served by existing institutions aretraditionally denied access to economic and government resources. Scheduledcastes in India amount to almost 15% of the total population (100 millionindividuals). Although various policies have long been instituted to

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provide greater access to government services for these groups, little pro-gress has been made except in male primary school enrollment (and even thendropout rates remain much higher than average). While there have been somesuccesses in involving these groups in the "development process" (notably,projects under the sponsorship of the National Dairy Development Board),their lower educational and health status is not likely to be significantlyimproved without explicit attention to the problems of penetrating the rigidstratification of village society. 1/

Current Status of Human Resource Development. Some of the obstaclesconstraining the more rapid development of human resources in South Asia havebeen broached already in the discussion of demographic characteristics. Thissection will survey in greater detail the actual status of human resourcedevelopment. But first one should draw attention to an important factor inSouth Asia which is the general interdependence of poverty, inadequate nutri-tion, poor health, and low educational attainments. Both cross-national andintra-country studies have demonstrated significant linkages between parentaleducation and child health in developing countries. A recent review of thesestudies has concluded that, on average, an additional year of schooling forthe mother is associated with a reduction of 9-10 per 1,000 in child mortality.Mothers of malnourished children were also found to have significantly higherprobabilities of being illiterate. 2/ The common thread running through allthese elements is the low social and economic status of women. In South Asiathis is apparent through differential attainments in both education andhealth, but even more important, in the interaction between female literacyand health status. A recent case study of health improvement in Keralaconcludes that the "high level of literacy and education among females in

1/ Although the particular problems of caste stratification are most severein India, there is also evidence that class divisions are also quitestrong in both Pakistan and Bangladesh, see, for example, Cain, Khanam,Nahar, Class, Patriarchy, and the Structure of Women's Work in RuralBangladesh, Population Council, New York 1979. In Sri Lanka, althoughgeneral accessibility is quite high, there are significant problems inreaching groups such as estate laborers who slip through Sri Lanka'sgenerally finer net of social services. The minority status of theseindividuals in the population is undoubtedly a contributory factor.

2/ These studies have been reviewed in S.H. Cochrane and ofhers, "The Effectsof Education on Health," World Bank Staff Working Paper, no. 405 (Washington,D.C., July 1980). The linkages have been explored in the case of Sri Lanka inP. Isenman, The Relationship of Basic Needs to Growth: the Case of SriLanka. Some indirect evidence on the education - nutrition - healthstatus linkage is also provided in the analysis of the nutrition com-ponent of the Narangwal experiment (Taylor, et. al. Malnutrition,Infection, Growth and Development: The Narangwal Expe ience whichdocumented that mid-caste families, with occupations requiring somenumeracy and literacy (shopkeepers, civil servants) had children withweight grains comparable to those of landowner cultivator families whowere providing significantly higher levels of calories.

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Kerala is the one factor which, in our judgment, has contributed most to theimprovement of the health status of infants and children." 1/

Education. Basic parameters in education are presented in Table 6.Before discussing these in detail, it is worthwhile to compare the currentsituation with that in 1950 or earlier. In 1950 the incidence of literacyin India was just under 30% for adult males and 9% for females. In Pakistan(including present-day Bangladesh) only 25% of adult males were countedliterate but almost 12% of the female population had attained this status. Atthe extremes were Nepal where only 10% of males and less than 1% of femaleswere literate contrasted to Burma which at that time had already reached alevel of 55-60% adult literacy, and to Sri Lanka which had attained theproportions 78% and 45% for males and females respectively. 2/ During thepost-war period progress in India was relatively greatest (even though theabsolute numbers of illiterates grew between 1950 and 1970). However, con-siderable progress in female literacy was made in Sri Lanka (accounting forabout two-thirds of its overall gain between 1945 and 1970).

If literacy rates give a rough indication of the stock of basicskills with which the period of independent development in South Asia begana comparison of enrollment ratios in the mid-1930s with the mid-1950s isinteresting evidence of the type of strategy that was intended to providethe human resource base for accelerated economic growth. Table 5 indicatesenrollment ratios for the two periods for Sri Lanka and India.

Table 5

Enrollment Ratios in India and Sri Lanka between 1930-34 and 1950-54

Primary School Secondary School Higher Education(Unadjusted) /a (Unadjusted) (No. per hundred

thousand population

1930-34 1950-54 1930-34 1950-54 1945-49 1960

India 15 22 5 16 84 149Sri Lanka 38 62 11 35 46 68

/a Adjustments for over and underage students have not been made.

Source: WDR estimates.

India has long had a relatively greater investment in higher education whichwas augmented at a more rapid rate than Sri Lanka during the first decade of

1/ P.G.K. Panikar, "Resources Not the Constraint in Health Improvement:A Case Study of Kerala," Economic and Political Weekly, Vol. XIV, No. 44November 3, 1979.

2/ Indeed as far back as 1920 Sri Lanka had achieved an adult literacy rateof 40% while that of India (including Pakistan and Bangladesh) was lessthan 9%.

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Table 6

Education Parameters in South ALia

Li:eracv RAtes Primary Enrollment Estimated Secondary EducationRatios EI Drop-out Rita Enrollment Expenditu-

Persons Male Female Persons Male Female (before 5th claE) Ratio Index e/

India 34 45g/ 22j/ 8 h/ 101hL/ 68h/ 69 28 82

Bangladesh 22 303/ 14j/ 48gL 581/ 38d/ 72 23 46

Pakistan 21 na. 44 64 25 50 17 53

Burma 67 n.e. 80 83 7i n.e. 22 43

Sri Lanka 78 86 n.a. 68.5 77 80 73 37f/ 55 79

Nepal 19 30a/ 8e/ 78 95 25 65 12 38

*/ Estimated on basis of primary enrollment ratios broken down by sex.b/ School enrollment includes average students and thus overstates ratios.c/ Based on 552 dropout rate by third class.dl Estimates as published in Primary Educeatio NetworkA in Bangladesh, National Poundation for Research on Human

Resource Development, Dacca, 1979..e/ Ratio of public expenditure on education to average for low income countries with latter related to date

calculated by UNESCO statistical division for 1974. These indices are likaly to be biased slightly on thehigh side due to variations in the years of numerator and denominator, and the use of GDP in the numeratorand GNP in the denominator. No significant deviations are expected from these adjustments.

f/ UNESCO Statistical Office.L/ Based on most recent census data; India, 1971; Bangladesh, 1974.h/ Based on 1977/78 estimates of the Government of India

Source: World Development Report, 1979

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independence. The relatively slow progress is primary school enrollment inIndia even from the low base of the 1930s is in striking contrast to Sri Lanka'srapid progress during this period and indicates that in the education sectorIndia's initial policies were heavily biased toward a "capital" intensivepattern (the returns to which appear to have been relatively low). India'srecent progress in primary school enrollment (see Table 6) clearly does repre-sent a break with the past but this expansion has been primarily at the expenseof secondary schooling for which enrollment ratios are only little higher in1970 than they were twenty years earlier. Higher education however has con-tinued to expand rapidly.

Literacy in South Asia does not vary significantly from the averagefor all low income countries but the range with the six countries of theregion nearly incorporates the range of the entire group. In Sri Lanka, atthe high end, only 1 in 5 persons remains illiterate contrasted with Nepalwhere the same proportion is classified as literate. However, even thesenational aggregates mask considerable variation. Literacy rates for womenappear to range from one-third to one-half those for males. As noted abovethis differential has serious ramifications for human resource developmentin education and other sectors as literate women are much more likely tosend their daughters to school, to undertake family planning, to be awareof nutritional requirements of infants and young children, and to assumesome responsibility for the health status of their families.

Considerable inter-regional variation within countries is alsosubsumed in the national aggregates. As indicated in Table 7 the range for15 major states of India nearly encompasses the range for the region as awhole:

Table 7

Statewide Literacy Rates for India, 1971

(est. on basis of population age 5 and above)

Kerala 69% West Bengal 38% Andhra Pradesh 38%Tamil Nadu 45% Karnataka 36% Madhya Pradesh 25%Maharashtra 45% Assam & Mizoram 33% Uttar Pradesh 25%Gujarat 41% Haryana 31% Bihar 23%Punjab 39% Orissa 30% Rajasthan 21%

The standard deviation among these states is 12 percentage points which repre-sents a very diverse range of conditions within India. Even within some statesthere remain significant variations, as between coastal and northern AndhraPradesh, or coastal and northern Karnataka or coastal and southern Orissa - ineach case the coastal region have significantly higher literacy rates. Whileit is difficult to separate the demand and supply sides it seems probable thatthese intra-state variations reflect the significant variations in demand for

literacy which result from variations in socio-economic conditions. 1/Although there is relatively little variation among the four divisionsof Bangladesh with literacy rates ranging from 19% in Rajshahi to 25% inChittagong Division, there is wider variation among districts particularlyin female literacy with the range stretching from 8% in Rangpu to 22% inBakergang.

Of course, with growing coverage of the primary school system, theincidence of illiteracy might be expected to diminish over time so that itcould not be regarded as a problem distinct from the spread of education.However, as Table 8 makes apparent, the age distribution of literates inIndia and Bangladesh is such that a high percentage of illiterates persisteven in the age ranges of 10-20 years, especially among females. Not onlywill this cohort likely remain a significant drag on overall improvementduring the next twenty to thirty years but they will provide the core ofresistence to increases in primary school enrollment in the next generation.

Table 8

Age Distribution of Literacy - India and Bangladesh

India Bangladesh(1971) (1974)

Age Group Males Females Males Females

10-14 60 38 41 2915-19 63 37 48 2520-24 60 28 47 1925-34 49 19 38 1435- 37 10 31 7

Without a successful approach to adult literacy particularly in the agecohort 10-19, attainment of basic literacy by greater than 40-50% of thepopulation will be difficult. 2/

The likelihood of little rapid progress particularly with respectto women is further brought out in a review of the primary school enrollment

1/ The coastal areas of Andhra Pradesh and Karnataka in particular areassociated with a much more advanced level of agricultural development.Southern Orissa, on the other hand, is abnormally depressed because ofhigh concentricities of scheduled castes and tribes although agriculturaloutput per hectare is not significantly below that of the coastal belt.This illustrates how social constraints may continue, in some cases, todominate economic factors as determinants of demand for human resourceservices.

2/ In this connection it is particularly disturbing to note the deteriora-tion in the rates for males in Bangladesh in the 10-14 age range. Thisand the very low percentage of literates in the 5-9 age group (12% forall persons as compared to 23% in India) point to significant qualityproblems in the current educational system.

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ratios (Table 6). While inter-country comparison must be treated cautiouslythere are significant differences worthy of comment. Both Burma and Sri Lankahave come near to achieving male/female parity at enrollment rates for personsnot significantly different from those in India and Nepal. (That both Burmaand Sri Lanka. have such significantly higher literacy rates with comparableenrollment ratios is indicative of the much longer period that these enroll-ment levels have been attained and of lower dropout rates resulting in a moreefficient educational system.) Bangladesh, Pakistan, and Nepal all haveparticularly serious problems with the under-enrollment of girls with theenrollment ratio for girls in Bangladesh estimated at 38% and for Nepal andPakistan both at 25%.

Secondary enrollment ratios portray a slightly different pictureof regional disparity. Sri Lanka maintains a high enrollment ratio at 55%of the relevant age group but those for the other countries fall significantly.Table 9 indicates the ratio between secondary and primary enrollment ratios:

Table 9

Ratio of Secondary to Primary Enrollment Ratios(mid-1970s, percentages)

India - 33 Burma - 28Bangladesh - 48 /a Sri Lanka - 71Pakistan - 39 Nepal - 15

/a The ratio for Bangladesh may be somewhatoverstated as the two enrollment ratios areestimated from somewhat different sources.

Source: Table 6

The extent to which this disparity may be appropriate given differentialrates of return between primary and secondary education based on employmentprospects and other labor market characteristics will be considered below inthe discussion of economy-wide issues. However, it may certainly be arguedthat a reorientation of curriculum toward content relevant to non-universitybound graduates should receive priority over secondary enrollment expansion.

Health. Indicators of the health status of South Asia, which arepresented in Table 10, indicate that the situation in South Asia differslittle from that of low-income countries as a group (which, of course, South

Asia would be expected to dominate in terms of population weighting).

As in education, the striking element of the data is the perform-ance of Sri Lanka, which in turn raises important issues of strategy andpolicy. In the first place it is apparent that neither calorie supply noraccess to safe water are necessary conditions for improvement in overallhealth status. In the former case, there is remarkably little variationamong South Asia but Sri Lanka is on the low side. Of course, the aggregatestatistics can conceal quite different patterns of distribution. There iscertainly evidence to indicate that consumption is distributed more equitably

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in Sri Lanka, especially taking into account the distribution of food subsi-dies; however, Sri Lanka's performance in terms of health indicators wasalready quite high in 1960 at a time when income was distributed considerablyless equitably than at present. 1/ In safe water supply, Sri Lanka also hasa far lower coverage than Bangladesh, India, or Pakistan with apparently littleadverse impact on relative health status. These instances simply illustratethat health and education status are subject to multiple and interactive in-fluences. For example, a dispersed infrastructure of basic health services,as in Sri Lanka, combined with less nutritional vulnerability can counteractthe lack of safe water, particularly in a more literate population with con-sequently enhanced ability to modify cooking and hygienic practices accordingto environmental requirements. Without the receptivity that literacy brings,health, sanitation, and nutritional dimensions must be attacked throughgovernment initiatives which are rarely successful in counteracting andexploiting the linkages which exist.

The sources of mortality which give rise to the pattern of lifeexpectancy and mortality reported in Table 10 are broadly similar acrossSouth Asia. They are briefly summarized in Table 11 though the caveat mustbe made that conditions of diagnosis vary tremendously and that there isoften inadequate information to distinguish between diseases with similarsymptoms.

1/ This relationship i's discussed by P. Isenman, op. cit. pp. 7-11, 24-28.The food rationing system has undoubtedly played an important role inSri Lanka over the past 35 years as it has provided a minimum subsistencefloor below which low money income did not lead to starvation or mal-nutrition. D. Gwatkin has estimated, for example, that in Sri Lanka only5% of the population consumes fewer than 1900 calories per day while inBangladesh as many as 25% of the population consume fewer than 1,700calaries (D. Gwatkin, "Nutritional Planning and Physical Well-Being inKerala and Sri Lanka" mimeo, Washington, D.C. 1978). Although lessextensive, the public distribution system in Kerala may have performeda similar role in improving nutritional status. See S. Kumar "Impactof Subsidized Rice on Food Consumption and Nutrition in Kerala" IFPRI,Washington, D.C. 1979. In Kerala, the widespread cultivation of cassava,may also provide an effective floor at least in terms of calories.

Table 10

HEalth Status Indicatorc in South Asia

Life Expectancy Child Death Crude Death Rate Per Capita Daily Population havingat Birth Rate Z Change Calories as I of Access to Safe

1977) ( 1977) 1977 since 1960 Requirement 1974 Water

India 51 18 14 -33.3 89 33

Bangladesh 47 23 18 -21.7 92 53

Pakistan 51 17 15 -34.8 93 29

Burma 52 15 15 -31.8 103 27

Sri Lanka 69 2 6 -33.3 91 20

Nepal 45 23 19 -34.5 95 9

Low Income Countries 50 19 15 -31.8 91 28

Source: WDR

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Table 11

Major Causes of Death

India Pakistan Bangladesh(1969) (1971) (1976)

Common RespiratoryInfections 24.5% 16.5% 17.2%

Childbirth & PregnancyComplications 12.4 8.4 5.0

Diarrhoeas 9.2 5.8 16.0Fevers 20.6 52.1 /a 17.1Tetanus 2.3 n.a. 9.6

/a An extremely high incidence of typhoid (33%) in all deathswas reported in Pakistan in 1971.

Sources: World Bank Reports 2018-PAK, 2323-BD and R. Cassen, India,Population, Economy, Society, London 1978.

Another major caveat is that these data do not reflect the serious, underlyingdebilitating conditions which dominate daily life in South Asia, such as lowlevels of nutrition and inadequate environmental sanitation and personalhygiene. Attacking these factors directly through preventive programs coulddramatically improve the reported mortality and morbidity conditions. Thesedata also serve to suggest the major causes of time lost due to illness. Twopieces of evidence from India indicate the potential magnitude of the effectof morbidity on productivity and employment in South Asia. Recently summaryresults from the Rural Labor Enquiry indicate that over 25 days per year arereported lost due to illness by men in rural labor households and over 43 daysare similarly reported by women. Both these figures were above the levelsreported ten years earlier in the preceding Rural Labor Enquiry, the differencebeing 7 days for men and over 18 days for women. Fewer days were reported lostby children - 20 days in 1974 - but there was marked deterioration over 1964/65when only 11 days were so reported. 1/ The second piece of evidence concerningthe incidence of morbidity dates from a 1956 survey of four community develop-ment blocks in Rajasthan which reported an average duration of illness perperson per year of 41 days for ages one to five years, 37 days for ages 5 to15 years, and 73 days for ages 15 to 55 years. 2/ Although figures of thismagnitude may not now be so widely prevalent because of the expansion of cura-tive services, the underlying debilitating conditions referred to above have notchanged dramatically so that indirect losses in earnings and output through low

1/ Government of India, Labor Bureau, Rural Labor Enquiry 1974-75 - SummaryReport, Chandigarh, 1978. "Other" causes are lumped in together withillness in these surveys but there is no reason to suspect significantchanges in the miscellaneous category.

2/ Reported in A. Mitra, India's Population: Aspects of Quality and Control,New Delhi 1978.

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productive capacity are likely to be still an effective constraint on thealleviation of poverty through "traditional" expansion of economic activity.

Malnutrition is undoubtedly the single most widespread and severehealth problem in South Asia. In spite of recent improvements in the per-capita availability of foodgrains, significant portions of the populationare estimated to suffer from inordinately low calorie intake and inadequatelevels of protein and deficiencies in various micro-nutrients. While thereare numerous measurement problems which confound various estimates of theextent of malnutrition, none of these alters the basic situation that in allSouth Asian countries, excepting Burma, there exists an aggregate caloriedeficiency in relation to average requirements varying from 5-11% in themid-1970s. 1/ In India where average food intake appears the lowest in rela-tion to "requirements," various local nutritional surveys have establishedthat as many as 40% of pre-school children in moderate and low income groupsexhibited some clinical signs of malnutrition. Common features of suchstudies are the far greater prevalence of malnutrition among female thanmale children and among higher than lower birth orders.

In Pakistan, the National Nutrition Survey indicated that about46% of families have inadequate caloric intake. Again, the main impact offamily deficits is born by women and children. This impact could be quitesevere, for as many as 11% of the families, consumption standards were lessthan 70% of the recommended levels. Micro-nutrient deficiencies involvedvitamin A, iron deficiency anemia, riboflavin, vitamin C and iodine in north-ern areas. These deficiencies greatly increase individual susceptibilityto disease. Due to the rapid population growth of recent years in Nepalcompounded by stagnating paddy production, food availability and the inci-dence of malnutrition have significantly worsened in that country during thepast decade. A recent WHO survey reported severe "protein-energy" malnutri-tion among 5-15% of the children a level wbich the organization ranks asamong the highest in the world. Again there are problems of maldistributionwith calorie supply for the 60% of Nepal's population living in the hillsand mountains considerably below the 95% average for the country as a whole.Indeed some 17% of the Hill.population are considered severely undernourished.Iodine deficiency is a severe micronutrient problem with as many as 50% ofthe entire population affected. Bangladesh has suffered similarly serious

1/ Valuable discussions of these problems are contained in R. Cassen"India's Human Resources", in India: Occasional Papers, World BankStaff Working Paper No. 279 and T.N. Srinivasan, Malnutrition andPoverty Estimates, draft mimeo. The problems relate, inter alia to(i) appropriate definitions of nutritional standards, (ii) the distribu-tion of individual nutritional requirements around the estimated meanand to (iii) the lack of data on intra-family allocations which couldconsiderably alter the nutritional impact of aggregated householdestimates.

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problems with sharp rural-urban disparities and high seasonal variation inthe availability of food. 1/

The organization of health services follows basically the samepattern throughout the region: the rural health center is intended as thebasic unit from which community-oriented health activities at the villagelevel are supervised and difficult cases are referred to the much less pre-valent rural or district hospitals. The rural center is therefore expectedto be the primary locus of supervisory activity for preventative and promotiveservices. This basic pattern was enunciated as long ago as 1946 in the "BohrCommittee" report. However, wholehearted acceptance of this approach is stillfar from widespread among political and social leaders and medical practitionerseach with their own special interests to protect. Furthermore, the existinghealth infrastructure is ill-adapted to shift rapidly to a low-cost promotiveand preventive approach to health care.

As illustrated in Table 12, there is significant variation in theincidence of both doctors and nurses in the populations of the six countries.

Table 12

South Asia - Population - Health Service Ratios(Population per Unit)

Doctor Nurse Co 2.Co 1 Hospital Bed1 2 3 4

Nepal 38,650 52,770 1.36 6,630Sri Lanka 6,230 2,240 .36 330Burma 5,410 6,120 1.13 n.a.Pakistan 3,780 10,040 2.66 1,720Bangladesh 9,600 62,700 6.53 6,000India 3,140 6,320 2.01 1,231Low Income Countries 10,300 9,720 0.94 1,236Middle Income Countries 4,470 1,930 0.43 793

Source: World Bank unpublished reports.

The most striking factor, however, is the extreme difference in the ratio ofdoctors to nurses in South Asia, excepting Sri Lanka, to that in other low

1/ It is striking that Sri Lanka can sustain aggregate health outcomes farabove those of other South Asian countries with per-capita availabilityof calories at a level 9% below average requirements (lowest but oneof the countries in the region). Much more equitable distribution ofcalories due to the foodgrain ration system, better utilization of fooddue to the widespread availability of health services, and better intra-family distribution due to high levels of female literacy undoubtedly allplay a role in explaining this apparent anomaly.

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income countries. This ratio which is close to unity in low-income countriesgenerally and less than one-half in middle-income countries averages 2.5 forSouth Asia (again excluding Sri Lanka). The rationale is that South Asia hasroughly twice the low income country average number of doctors per capitacombined with a slightly lower than the average number of nurses per-capita.As performance on health indicators for South Asia is approximately comparableto that for low-income countries in general, it would appear that the approachfollowed in South Asia has, at least in a macro-sense, utilized highly trainedmanpower to substitute for facilities, and particularly for middle-level per-sonnel. Judged on the basis of health outcomes, this would appear to havebeen an inefficient strategy more concerned with promoting a medical infra-structure than with developing human resources. As a result most South Asiacountries are ill-prepared to make the transition to the decentralized, rural-oriented health delivery system that is now widely recognized as appropriate.In contrast, Sri Lanka's achievement in the health sector has not relied onheavy investments in manpower training. The key elements seem rather to havebeen an appropriate ratio of middle-level manpower and a broad-based provisionof infrastructure that promoted easy accessibility.

A final aspect of the health system in South Asia which should notbe underestimated in importance though difficult to quantify concerns therole of indigenous systems of medicine, particularly the homeopathic,ayurvedic, and unani systems. 1/ These are officially recognized in mostSouth Asian countries and governments generally support training in them. 2/Although the extent of their influence has not been systematically evaluatedthey do provide widespread coverage even in remote rural areas and thereforegenerally more accessible to the bulk of the population. In Bangladesh it hasbeen estimated that 75% of medical consultations are provided by practitionersof indigenous systems. Although government support has brought improvementsto the practice of these systems, it has not succeeded any more than withregard to the western systems in reorienting activities toward promotive andpreventive aspects of health. Dais or traditional midwives are also extremelywidespread in rural South Asia. There have been efforts to involve thesepersonnel in family planning promotion, but this has again not spread rapidlyas an activity. The training of dai's in fundamentals of hygiene probably hasplayed an important part in reducing both infant and maternal mortality. Lowsocial acceptability of these ttaditional practitioners in new roles andfunctions, often compounded by their own antipathy to modern, preventive

1/ Briefly homeopathic medicine relies on the use of "natural" remedies ascontrasted to drug-based treatment of allopathic or western medicine.Ayurvedic practice follows the precepts of the Hindu Vedas while theUnani system was developed under the Moghuls and is based on theancient Greek concept of four humors which must be kept in balance tomaintain health.

2/ Large numbers of registered medical practitioners under these varioussystems contribute to the low population per doctor figures for Indiaand Pakistan recorded in Table 12. For example, in India in 1976 only32% of registered medical practitioners were trained in "western,"allopathic medicine. Of the remainder approximately one-third weretrained in homeopathy and two-thirds in ayurvedic and unani practices.

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concepts has proved to be a significant obstacle, at least in some areas ofthe region.

Economy Wide Issues in Human Resource Development

Given the generally low levels of human resource development inSouth Asia and the obvious requirement of significant government involvementand investment in the sector if improvements are to be made, the questionnatually arises of the linkages between human resource development and theimportant economy-wide issues of growth, productivity, and poverty. Tradi-tional analysis has focussed on the rates of return to investments in educationas measured by years of attainment and similarly on productivity effects ofimprovements in health status. Also important in the context of developmentpolicy are the linkages among human resource sectors particularly health,education, nutrition, and family planning and the relationship betweenpoverty alleviation and human resource development.

Returns to Human Resource Investments. The formal calculationof rates of return to education in South Asia has been undertaken primarilywith respect to India and the relevant studies have been reviewed elsewhere. 1/Most such studies have been limited to cross-sectional samples of data col-lected during the 1960s from urban areas for males within single industries.The rapid expansion of educational cohorts during the late 1960s and early1970s must have had a depressing effect on returns particularly in view ofstagnating income and employment during the decade 1965-75. Nevertheless,certain conclusions appear plausible, in particular the structure of ratesof return (both private and social) which appear to decline, almost withoutexception, from primary through middle, secondary and graduate levels. Table13 summarizes the information indicating that social rates of return to pri-mary education averaging almost 3 percentage points above those for middleand secondary school, which in turn average more than 3 points above thosefor baccalaureate.

Table 13

Ranges of Rates of Return to Education in India

Education Level Number of Studies Range of Rate of ReturnSocial Private

Primary 4 13.4 - 20.2 16.5 - 24.7Middle 5 10 - 16.8 14 - 19.2 /aSecondary 3 9.1 - 20 10.4 /bCollege, B.A. 8 7 - 16.3 8.7 - 14.3 /c

/a Based on only three studies/b Based on only two studies77 Based on only four studies

Source: S. Heyneman, op. cit.

1/ S. Heyneman, "Investment in India Education - Uneconomic?" World BankWorking Paper No. 327, May 1979.

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None of these rate of return studies have made appropriate adjustments forshadow prices or distribution weights: such revisions should result in some-what higher rates although these may be offsetting factors. 1/ At any rate,these calculations would not contradict a view of the returns to educationalinvestment in India as not radically out of line with returns to investment inother sectors at least in the 1960s.

An important factor which has dampened rates of return to certaineducational investments beyon"d the primary level in all South Asian countriesis the high incidence of unemployment particularly among secondary and collegegeneralists. The situation in Sri Lanka, Pakistan, and India is summarizedin Table 14.

Table 14

Unemployment Rates by Status of Education

India /a Pakistan Sri LankaAndhra AllPradesh Kerala Maharashtra U.P. W. Bengal Ages 15-19 20-29 Ages

Illiterate 0.11 0.76 0.13 0.20 1.01 10.5 36 18 9Literate only 81) 2.31) 0.58 0.32) 1.60 1.1 17 14 4Primary ) ))16.8 50 14 13Secondary 8.02 40.67 6.24 3.23 21.23 ) 67 37 29Graduate 25.76 n.a. 17.2 22.9 30.2 ) 15.n.a. 29 15Agriculture 41.89 41.46 19.3 -

/a Education categories exclude technical education and therefore thesedata are restricted to generalists only.

Source: India, National Sample SurveyPakistan, World Bank unpublished report.Sri Lanka, World Bank unpublished report.

1/ The use of shadow wage rates for unskilled labor would reduce theopportunity costs of foregone employment but could also reduce post-education returns depending on the extent to which graduate unemploy-ment rates were taken into account in theL original studies. Whilethe distributional impact of past educational investments has beenregressive thus depressing past average rates of return, futureexpansion of the educational system, especially at the primary andmiddle levels would be more redistributive.

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The rate of unemployment for all graduates in India was estimated by thePlanning Committee to 10.8% in 1977/78. This figure varied considerablyby sector from 1.9% among medical graduates to 16.1% among science graduetes.Although India places heavy emphasis on employment creation in her currentfive-year plan, that document projects the rate of graduate unemployment toincrease to 15% by 1983 with over 40% of the increase in the number of arts,science, and commerce graduates remaining unemployed through 1983.

Although much less information is available concerning humanresource development in Burma, a recent study of manpower utilization revealssignificant imbalances with surplusses in the professional categories whichwould imply an unemployment rate for graduates in 1981-82 well over 20%. Incontrast sub-professionals and skilled workers are in short supply, a situa-tion which is expected to worsen over the medium term. Significant unemploy-ment re-emerges at the semi-skilled level corresponding to middle schoolgraduates with the 1978/79 underutilization rate of 10.6% forecast to growto 16% by the mid-1980s. 2/ While crude labor market information such asthis cannot tell one much concerning the economics of education in Burma itdoes imply that the mesh between the economy and the output of the educationsystem is by no means an even one.

The length of unemployment in both Pakistan and India has beenfound to be positively correlated with educational status indicating thatthose who are better educated can afford to wait for suitable employment (orat least until expectations and opportunities come more into balance). Theage breakdown illustrates another dimension of the problem, namely its con-centration among younger age groups. In sum there appears to be a queuingoperation at work after graduation for those with higher educational creden-tials. Once employed subsequent periods of unemployment for graduates aresignificantly reduced. Unfortunately, time series data on the queueingphenomenon in South Asia do not permit an analysis of the co-variance amonglength of queues, age of participants and rates of economic growth. Although,given the generally poor growth performance in South Asia during the early1970s, one should be somewhat circumspect in reaching conclusions, it would

1/ Although no such comprehensive data appears to exist for Bangladesh,it has been estimated that as many as 50% of the output of graduateinstitutions including polytechnics were unemployed or in jobsunrelated to graduate training up to 6 months after graduation.This statistic would appear to reflect an employment situation atleast as bad a those reported in Table 14.

2/ Estimates presented in R. Faruqee, "Manpower Planning and Utilizationin the Socialist Economy of Burma," mimeo, World Bank 1979.

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appear that further expansion of the primary education should receive muchgreater relative emphasis than it has in the *past. 1/

Many would argue that the greatest pay-off from education to thedevelopment of South Asia relates to indirect, and even non-market, effectsof education on the economy. For example, literacy and numeracy have beencorrelated with more rapid adoption of technological change in agriculture.Research conducted in the Terai region of Nepal has confirmed the significanceof numeracy, in particular, as a determinant of enhanced agricultural perform-ance. When an identifiable technological package involving water, fertilizer,high-yielding varieties, and credit is readily available as it is in muchof South Asia, the economic returns of the more rapid and successful adop-tion of the package brought about through widespread literacy and numeracycan be quite significant. Literacy and numeracy can also make a significantcontribution to the more rapid spread of community based decentralized plan-ning which, though widely accepted as desirable in South Asia, has yet to beimplemented to any perceptible degree. Further, the role of education inbreaking down communal and sectarian barriers, although impossible to quan-tify, should not be discounted in a region with such deep and persistentcultural divisions. Education brings with it many non-quantifiable butimportant constituents of structural change such as adaptability, "modern"attitudes, and accelerated aspirations. It is likely that if South Asianeconomies are to begin the transition to a period of sustained industriali-zation, these factors related to basic education could be crucial in facili-tating the shift of manpower from traditional to modern, non-agriculturalactivities and thereby sustaining the process of structural transformation. 2/

Linkages among human resource sectors. Although direct effects ofhealth and nutrition improvements on productivity can be strongly presumed

1/ This may seem a somewhat tentative endorsement given the currentreceived wisdom that primary education has been relatively underfundedand inadequately stressed in most developing countries. But the onlyrate of return study in India based on an all-India sample of malesand females found higher rates of return to middle-school than toprimary education (15.5 as opposed to 13.4%). Returns to middle schooleducation may reflect more of a screening element than returns toprimary education and the non-market effects discussed in the followingparagraph are also likely to be associated to a relatively greaterextent with primary completion so that one cannot place excessivereliance on a single rate-of-return study.

2/ The export of educated manpower from South Asian countries has recentlygrown dramatically in magnitude and illustrates the capacity for respond-ing to structural imbalances and resulting demands though in this casethe growth effects are external to the countries in question with foreignexchange remittances the primary benefit. Some analyses have questionedwhether the benefit cost ratio exceeds unity in this process and furtherinvestigations have been undertaken. For the purpose at hand one maynote that those states and regions within countries benefitting rela-tively more are precisely the areas with significantly higher levels ofeducational attainment (e.g. Kerala and Punjab in India).

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because of the widespread incidence of malnutrition and morbidity, l/ therehas been little success in quantifying their impact on growth. However,recent work in the case of Sri Lanka has quantified some of the linkagesbetween various dimensions of human resource development. In particular, SriLanka's high life expectancy accounts for about 3/4 of the difference betweenSri Lanka's expected fertility rate (based on cross-section regression analysisamong countries with per-capita income as the independent variable) and heractual rate of almost half the expected value. Furthermore, using similartechniques Sri Lanka's higher than "expected" literacy rate was found toaccount for over one-half the difference in life expectancy between "expected"and actual values. 2/ A similar relationship has been demonstrated for Keralaamong the states of India. 3/

Improved health and nutrition status is equally likely to have animportant effect on the productivity of investments of education. Perhapsas many as 50% of children attending primary school and a much greater per-centage of those children from poor families who do attend school have vir-tually no meal either before or during the school day. Even if eventuallytheir individual low-level calorie requirements are met, the daily patternof hunger and associated listlessness must be a factor in poor learningretention, disillusionment with school and eventual dropping out, factorswhich considerably reduce the efficiency of investments in primary education.An effect of better nutrition on school enrollment has been hypothesizedfrom the association of high primary enrollment ratios and school feedingprograms; in terms of an incentive, school-feeding functions like any othersubsidy which can be costed out in terms of augmented family resources. Butefforts to document a relationship between school feeding and health oreducation performance have been neither frequent nor successful. 4/

1/ See section on current health status above. It has been estimated thatin any given week one-quarter of the population of India is ill, withthe morbidity rate over twice as great in rural as in urban areas - 29.5%to 13.1% (World Bank

2/ World Bank unpublished report and P. Isenman .L. cit. Although thecross-national correlations cannot by themselves confirm causality,they are consistent with intra-country longitudinal data as reportedby Cochrane, et. al., op. cit.

3/ P. G. K. Panikar, "Resources Not the Constraint on Health Improvement:A Case Study of Kerala," Political and Economic Weekly, op. cit.

4/ One of the few studies of the impact of school-feeding was conductedin Orissa in 1970-72. It concluded that class enrollments particu-larly in lower primary were enhanced by school feeding, especially intribal areas. There was also some indication that the incidence oflong-term absenteeism due to illness and drop-out rates were reducedbut these data were not statistically significant. See P. Roy andR.N. Rath, School Lunch in Orissa, Council for Social Development,New Delhi, 1972.

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Another obvious point which nevertheless should be noted in thecontext of South Asia is the reciprocal effect of longer life expectancyand reduced morbidity on increasing the returns to education, essentiallyby extending the recovery period and allowing for greater intensity ofwork resulting in greater productivity. This would be particularly truefor individuals having attained middle and secondary levels for whom theremay well be, if data from developed countries is any guide, an interactionbetween experience and years of schooling in shifting out the lifetimeearnings path. l/

Human Resource Development and Poverty. The relative magnitudeof the poverty problem in South Asia varies considerably among countries.Sri Lanka appears to be at the low end with "acute" poverty characterizingapproximately 22% of the population. In Pakistan an estimated 35% of therural population and 23.3% of the urban were classified below the povertyline while in India the respective estimates were 48% of the rural popula-tion and 41% of the urban population below the poverty line as defined bythe Planning Commission. Lower income levels in Bangladesh result in anestimated 60% of the rural population in 1976/77 being considered extremelypoor. 2/ Based on these estimates, a rough calculation of the extent ofpoverty in South Asia in 1980 yields a figure of approximately 410 millionpersons corresponding to an average incidence in the region of 46%. 3/.

1/ Of course, it is true, as noted above, that education and literacyalso have significant effects on health outcomes and longevity. Thisreciprocal relationship is an important reason why the expansion ofhealth services should be viewed as a complementary investment toprograms for universalizing primary education or adult literacy.

2/ The definitions and sources for these various estimates are diverse butsome rough comparability should exist. For Pakistan, the estimate isderived from adjusted Planning Division estimates reported in EmploymentStrategy - Pakistan, ILO, Geneva, 1977. The Sri Lanka estimates arebased on the income levels necessary "to sustain a consumption levelconsidered acceptable relative to minimum welfare standards." P. J.Alailima, "A Profile of Poverty in Sri Lanka," mimeo, undated. TheIndian estimates are based on the mid-point of the expenditure classassociated with purchasing power sufficient to obtain "recommendednutritional requirements," as reported in the Draft Five Year Plan, GOI,New Delhi, 1978. The Bangladesh figures are based on a per-capita incomelevel representing 85 percent of the minimum recommended average caloriestandard. 86 percent of the Bangladesh population live in households withper-capita incomes below the level associated with average recommendedcalorie intake. These estimates are reported in 0. Nijhawan, Bangladesh:Consumption Levels, Inequality and Poverty 1963-1976, draft mimeo, 1979.

3/ The average incidence for the four countries discussed above was appliedto Burma and Nepal to get a rough estimate of the overall extent of povertyin the region. Variations in the poverty line which correspond to oneor another interpretation of "hardcore" poverty would obviously affectthis percentage which is admittedly arbitrary. I. J. Singh reviews therange of estimates and their various implications in Annex I to his SmallFarmers and the Landless in South Asia, World Bank Working Paper No. 320.

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In order to evaluate strategies for poverty alleviation and theirrelationship to human resource development, it is important to understand, atleast in broad terms, the characteristics of poor households with respect totheir occupational and social status as well as their human resource attain-ments. In broad terms the rural poor in India have been grouped in four majorcategories: (i) landless agricultural laborers; (ii) agricultural laborhouseholds with very little land (too little to serve as a significant sourceof income); (iii) other rural labor household dependent on non-farm employment;and (iv) small farmers with fewer than five acres (and usually with higherthan average dependency ratios). 1/ Further evidence on the distribution ofpoor persons in terms of usual activity is indicated for two Indian states inTable 15.

Table 15

Percentage Distribution Usual Activi,ty of Persons by MonthlyPer-Capita Expenditure Rural Maharashtra (M) and Gujarat (G),

NSS 27th Round, 1972/73

Decile of Monthly Per-Capita Expenditure

1 2 10 All

Class of Worker G M G M G M G M

Self-employed 33 19 37 19 56 35 43 25Employees 41 59 34 56 19 30 27 44Family Helpers 26 22 29 25 25 35 30 31All 100 100 100 100 100 100 100 100

Occupation

Owner or TenantCultivators 48 34 54 37 69 63 60 48

AgriculturalLaborers 34 52 28 47 6 14 19 36

Other Agricultural 9 3 10 4 8 2 9 3Non-Agricultural 9 11 8 12 17 21 12 13Total 100 100 100 100 100 100 100 100

Source: P. Visaria, Living Standards, Employment and Education in WesternIndia, 1972-73, draft mimeo, 1977.

Although these states are among those with higher than average per-capitaincome due to a greater incidence of urban-based industrialization their ruraleconomies have grown less rapidly and in terms of labor force structure

1/ B. S. Minhas, "Rural Poverty, Land Distribution, and Development Strategy"in Poverty and Income Distribution in India, eds. Srinivasan and Bardhan,Calcutta, 1974.

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bracket the all-India average. Clearly employees and agricultural laborers,in particular, are much more heavily represented among the poor than in thepopulation at large. While there are also significant numbers of owner-cultivators among the poor, very few of these operate significant holdingsas the average size of land holding of cultivating households in the lower twodeciles was 4.5 acres in Gujarat and 4.9 in Maharashtra compared to statewideaverages of 7.4 and 7.6 acres respectively (again excluding landless households). 1/

A similar profile of the poor characterizes other South Asian coun-tries. A socio-economic survey of Sri Lanka undertaken in 1969/70 indicatesthat almost 40% of the poor were estate laborers with another 9% generalagricultural labor. Poor cultivators accounted for almost 30% of the totalwith remainder made up of laborers in non-farm enterprises and individualsself-employed in traditional activities. 2/ While comparable occupationalbreakdown is not available for Bangladesh, Table 16 indicates sources ofhousehold income for the lower four income deciles (aggregated) compared toall groups for 1973/74 and 1976/77.

Table 16

Rural Bangladesh: Sources of Household Income

(Percentages)Income Class Agriculture Wages Commerce Others

73/74 76/77 73/74 76/77 73/74 76/77 73/74 76/77

Bottom 40% 32 26 31 50 6.5 7.5 30 17Top 5% 69 60 6 19.5 10 8 15 13All Groups 59 50 12 26 10 9 19 15

Source: 0. Nijhawan, Bangladesh - Consumption Levels, Inequality and Poverty1963-1976, draft mimeo, World Bank, 1979.

It is clear that the poor receive a significantly lower proportion of theirincome from agriculture than the population at large; furthermore, this pro-portion declined during the 1970s with a growing proletization of the poor(indeed of all groups) as the proportion of income originating from wage labor

1/ The average per-capita land-holding of poor households is less than halfthe statewide averages because household sizes are inversely correlatedwith monthly per-capita expenditure levels (although there is a positivecorrelation between size of land-holding and family size).

2/ Although a comparable breakdown for all income groups is not available,estate workers constituted only 12% of all households as compared to 17%of households receiving less than Rs. 200/month in 1969/70 (the povertycriterion used in the occupational breakdown). Figures in the text referto proportions of income receivers.

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increased markedly. l/ The reduced importance of agricultural income isunderscored by the distribution of land ownership in Bangladesh where over

three-fourths of rural households hold slightly over 20% of the cultivableland. An estimated 50% of rural households in Bangladesh are e-timated tobe "functionally" landless according to the Land Occupancy Survey of 1978. 2/The situation in Pakistan is less clear, but evidence from a 1971/1972 house-hold survey indicates that 30% of rural households whose head was self-employedfell below a poverty line of Rs. 30 per month per capita (1971/1972 prices)while 35% of households with wage-earner heads were classified as poor under

the same criterion. These percentages are not dissimilar from the 1973/1974figures for Bangladesh. Whether or not a shift of the poor into the wage-earner category has also occurred during the 1970s in Pakistan, it seems clearthat a general pattern prevails across the region. Low productivity andincome with resulting depressed consumption levels is concentrated amongagricultural labor households and among cultivators with marginal landholdings.Furthermore, the significance of agricultural labor households in characteriz-ing the poor appears to have generally increased during the past decade. 3/

With little direct access to complementary inputs, whether landor capital, the status of human resource development among the poor becomesan important consideration in assessing the prospects for improving levels ofwelfare. Although the distribution of educational and health outcomes appearsless skewed than income or physical assets (see, for example, Table 17 below),the poor are still at a significant disadvantage. Available data from Indiaindicate that literacy rates are uniformly positively associated with familymean per-capita expenditure. 4/ The dynamic aspects of this relationship areindicated by the association of literacy rates for different age cohorts withfamily expenditure. The analysis of P. Visaria indicates that while youngergroups in all expenditure deciles have higher proportions of literates, theliteracy rates for individuals, age 45-49, in the top two expenditure decileswere up to 40% higher than individuals, age 10-15, in the lower two expendituredeciles. Over time the sex differential in literacy attainment has tended todisappear among the top expenditures deciles but not among the bottom deciles.Thus while literacy in India does appear to be spreading among the poor, with

1/ The major source of this shift for the poor was a reduced role for"other" income sources. The extent to which these changes might relateto definitional changes between surveys is not known.

2/ Nijhawan, op. cit. p. 21.

3/ In the case of India, the proportion of agricultural labor householdsamong all rural households increased markedly between the Rural LaborEnquiry in 1964/65 and that in 1974/75. See R. Grawe, India - Employmentand Employment Policy: A Background Paper, mimeo, World Bank, 1979.

2/ This discussion draws heavily on the presentation of P. Visaria inLiving Standards, Employment and Education in Western India, 1972-73,draft mimeo, 1977. The incidence of literacy in the top expendituredecile was over 3 times that in the bottom decile in both Maharashtraand Gujarat. The data stem from the National Sample Survey, Round 27,

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even some indication of a general acceleration in progress at least in the1950s and early 1960s, 1/ girls, ages 10-14 continue to have only slightlygreater incidence of literacy than the average for their sex, ages 15 andover.

Table 17 reports the incidence of primary school participation(as a percentage of the relevant age group) by income (or its relevant proxy)classes for India (two states), Bangladesh, and Sri Lanka.

Table 17

PARTICIPATION RATES IN PRIMARY EDUCATION BY INCOME CLASS

Income India/ Bangladesh /b Sri LankaClass Gujarat /c Maharashtra /c

Male Female Male Female Male Female

1 22 8 24 16 18 13 622 27 10 29 18 23 18 693 29 20 35 20 28 18 764 35 23 39 30 32 21 805 48 35 46 32 33 23 876 58 41 53 43 46 33 767 54 51 55 53 46 36 86

/a Income class refers to mean per-capita expenditure decile as measuredunder the NSS with 3rd & 4th, 5th & 6th, and 7th & 8th deciles combined.

/b Income class proxied by family landholding in decimals, classes equiv-alencies are: 1-0 to 99 decimals, 2-100 to 199 decimals, 3-200 to 299,4-300 to 749, 5-750 to 999, 6-1000-1499 and 7-1500 and above. Sampledrawn from 23 villages.

/c Rural areas only.

Source: India - N.S.S. 27th Round as reported in P. Visaria, op. cit.Bangladesh - National Foundation for Research on Human Resource

Development, Primary Education Network in Bangladesh:Capacity and Utilization. Dacca 1979.

Sri Lanka - Socio-Economic Survey 1969/70 as reported in P.J.Alailima, "A Profile of Poverty in Sri Lanka" mimeo,undated.

1/ Although this acceleration appears to have tapered off somewhat in thelate 1960s as the improvement of the age cohort 10-14 over the cohort15-29 was less than half the improvement of the 15-29 cohort over the30-44 group. It should also be noted that the acceleration of thosein the bottom deciles was less rapid than that of those in the top.

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These data illustrate that across South Asia, the differential

degree of participation in the educational system by income class variesstrikingly. The lowest income class in Sri Lanka participates in primaryeducation at a rate about 50% greater than children of the highest classin Bangladesh and 15% greater than in India. Nevertheless, there remaineda differential of 24 percentage points in participation rates between thetop and bottom classes in Sri Lanka. This was about the same as the top tobottom differential in Bangladesh but considerably less than the 34-37 pointdifferential in India. Sex differentials among income classes are also quitepronounced. In India these differentials practically disappear in the topexpenditure decile but female participation rates average only 60-70% of malerates through all other deciles (even dropping to 30% for the bottom decilesin Gujarat).

These data make clear that programs which aim at the universaliza-tion of primary education will necessarily be progressive in their impact onthe distribution of public services and perhaps ultimately on the distributionof income through improved earning capacity for children of the poor. Sucha result would be much more difficult to predict in the case of the extensionof health services. On the one hand, it is certainly true that the poorin South Asia are characterized by lower health status. Even in Sri Lankawith an extensive health care system which is apparently utilized by the pooras frequently as by the rich, the morbidity rates for those in the lowestincome groups were 12.5% higher than the average for all groups. Similarlypoor families were estimated to suffer an incidence of third-degree protein-calorie malnutrition (weight loss of 40% relative to normal weight for heightstandard) of close to 20% - a condition which did not occur in the highestincome group at all. 1/ On the other hand, it is much less easy to identifythe actual impact on health of alternative health service patterns. It isquite likely that even if the poor had equal access to health services thatoutcomes would still be skewed in favor of the better nourished and betterhoused. Furthermore, in the highly stratified environment of many SouthAsian villages, equal access itself would be very difficult to define sincethe distribution of many health services depends greatly on demand, which,particularly in the absence of widespread literacy, is likely to be skeweddecidedly in favor of the relatively advantaged groups.

One aspect of the maldistribution of health services which undoubted-ly contributes to limiting their impact on poverty alleviation is a strongurban bias. Data from India indicate that as many as 75% of all hospitals and89% of all hospital beds were in urban areas (having 20% of the population).

1/ P.J. Alailima, op. cit. Using the same income classes as in Table 17above, Alailima reports that the percentage of population attendinggovernment health facilities in Sri Lanka rises slightly from 22% inthe lowest income group (below Rs 100) to 24% in the next three groups(spanning Rs 100 to Rs 599) and then declining to only 11% among thosein the highest income group (who rely on private practitioners to amuch greater extent).

The urban death rate was about 60% of the rural rate with the comparison ofinfant mortality rates being only slightly less favorable. 1/ And, althoughthe environmental conditions of urban slums are often decried it is estimatedin India that only 28% of urban dwellings have walls of poor or inadequatematerials while 70% of rural houses fall into this category. Of course, urbanhealth services are often available to those from rural areas but it is quiteunlikely that the rural poor would be proportionately represented. Under thesecircumstances simply more rapid extension of basic health facilities to ruralareas would be likely to have a redistributive effect even if special redis-tributive provisions were not built into the programs.

Internal Efficiency in the Delivery of Human Resource Services.

While the preponderance of evidence presented in the previous sectionimplies that human resource development could make a significant impact onpoverty alleviation, the countries of South Asia must operate under severeresource constraints which lead many observers to question whether more rapidprgress in human resource investment is possble. While a redistribution ofpublic expenditures toward the human resource sectors need not damage, indeedshould enhance long-term growth prospects, the efficiency of present deliverysystems in education and health is so poor that a simultaneous restructuringwould be required to justify any significant reallocation of resources. Sig-nificant elements of this restructuring could be and in some cases are beingundertaken without significant budgetary commitment and should result in betteroutcomes in the context of "normal" expenditure growth. Nevertheless, itseems clear that long-term improvement will require an increased share ofgovernment resources directed to human resource development. In some sectorsand countries, this may not necessarily imply an increased share of GDP. Forexample, in Pakistan it is estimated that private expenditures on healthexceed by a factor of three-to-four expenditures in the public sector. Almost50% of these expenditures go to physicians in private practice and another 20%to traditional healers. Programs which broaden the access to preventive andsimple curative care and which provide support for individuals to take greaterresponsibility for their own health could considerably reduce private sectorexpenditures while improving health care standards. But the initial years ofany widespread promotive, preventive program will likely require higher levelsof government expenditure without any immediate fall-off in private, curativeexpenditure.

Comparable estimates for direct private expenditures on educationdo not exist but it is likely that these will constitute a significantportion of public expenditures although the distribution of private andpublic expenditures will vary among educational stages. In Bangladesh roughestimates put direct private expenditure on education, primarily at thesecondary and college level, equal to approximately one-half governmentexpenditures. This proportion is likely to be less in Pakistan and Indiawhere government assumes responsibility for all schools. In general, South

1/ The incidence of infant mortality is an estimated 80 per thousand in urbanareas to 115 in rural areas.

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Asian countries spend relatively less than other low income countries oneducation: referring back to Table 6, expenditures as a proportion of GDPfor the six South Asian countries ranged from 38% of the norm for low incomecountries in the case of Nepal to 82% of the norm in the case of India. 1/Sri Lanka was also high at 79% of the norm with all remaining countries around50%. Those countries which are less than half of the low-income country normsof public expenditure to GDP - Nepal, Bangladesh and Burma - are unlikely tobe able to significantly improve the quality or coverage of service withoutrelative increases in expenditure. In contrast, India with performance levelsconsiderably below those of Sri Lanka should be able to make considerableprogress from reallocation within the sector.

The usual pattern of expenditures per student being highly skewedtoward upper educational levels is very pronounced in South Asia. Table 18presents some representative calculations for the three major countries.

Table 18: RATIOS OF EDUCATIONAL EXPENDITURES PER STUDENT BY LEVEL

Year Prima Secondary to Primary Graduate to Primary

India 69/70 5 208 6,810Bangladesh 74/75 3-4 143 4,286Pakistan 75/76 17 250 1,694

These disparities would be even greater if the wastage at early stages ofprimary education did not significantly reduce enrollments. As the estimateddropout rates in Table 6 indicate less than half the number of students thatentered the 1st class, complete the 5th. This means that on average from 10to 12.5 years of instruction is given for every primary school graduate fromthe 5 year program. This situation worsens if adjustments are made for actualattendance as opposed to official enrollment. Typical attendance averagesonly about two-thirds for both students and teachers in Bangladesh and isreportedly not much better in parts of India and Pakistan. 2/ The effectof absenteeism in Bangladesh is such that on an average of every other daythe teaching and supervision load of students per teacher would be doubled toover 80. The implications of these rates of teacher absenteeism are discour-aging for those hoping that a revitalization of the existing primary educationstructure could improve the efficiency of the whole system. With many teachersrarely in attendance, and a large percentage of those who are, preoccupiedmainly with keeping order while relying almost exclusively on rote learningtechniques of instruction, there is little basis for reform.

1/ Part of the explanation may relate to the relatively low wage levels inSouth Asia for skilled manpower (as compared to other low-income coun-tries). On the basis of purchasing power parity exchange rate conver-sions, the position of South Asia would improve but the relative rankingswithin the region and general conclusion are unlikely to be significantlyaltered.

2/ This may be the "reverse" side of the low-wage standards for primaryteachers.

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If the consequences of poor teacher motivation are regrettable, thecauses are understandable. Living conditions in rural areas are often diffi-cult and many teachers are "forced" or choose to live a considerable distancefrom their schools. A survey in Bangladesh revealed that almost 20% of allteachers reside three or more miles from the school, a distance which couldrequire from three to four hours per day in commuting (on foot). The conditionsin schools are hardly encouraging to those teachers who do come. Schools areoften ill-constructed, without pacca walls, floors or roofs in almost half thecases. While education can certainly be conducted in the open or under primi-tive shelters, this bucolic "ideal" fails in monsoon weather, in the summerdust and heat, and never, even in the best weather, can it provide the teachingand storage facilities necessary for a modernized curriculum. The type offacilities which are often not available are not "frills" to a basic education.They include blackboards, benches for seating, rudimentary play areas and maps.In addition almost 70% of the schools in Bangladesh have no sanitary facilities- a statistic which is unlikely to be out of line with conditions throughoutSouth Asia. 1/ This factor alone is an important impediment to an increasein the enrollment and attendance of girls in rural areas. 2/

1/ Sample survey information from Bangladesh yields the following statisticsconcerning the lack of facilities:

Facility Percent of Schools WithoutRural Urban Total

Drinking Water 21 21 21 /aLatrines 71 53 69Maps 44 56 45Blackboard 7 5 7(2 or fewer) 26 14 26

Playgrounds (less than 14 56 1630 decimals)

Benches 2 2 2Number of students per bench 10 6 9

(norm - 5)

/a Figure jumps to 54% when account taken of tubewells outof order.

Source: NFHRD, op. cit. Dacca 1979.

The impact of these factors is perhaps best summed up by the authors ofthe NFHRD survey, "most of our schools are ugly, gloomy and forlorn. Theyfail to inspire lofty imagination or to provide a nice parlance for thedemonstration of noble manners. Most of them look rustic, primitive anduninteresting ... Many schools have stinky atmospheres, suffocating tomoderately clean people."

2/ In India, sanitary facilities for girls were reported in only one-halfthe schools sampled in an evaluation of special programs for girlseducation conducted by the Programme Evaluation Organization of thePlanning Commission.

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Under these circumstances, even the most dedicated teacher couldnot be faulted for failing to sustain a high level of motivation. Indeedconscientious teachers are faced with difficult trade-offs between quantityof throughput and quality of outcome for those who do persevere and attendthroughout the year. Those familiar with rural conditions indicate thatteachers readily discriminate among their students, concentrating attentionon those they deem most likely to succeed. Others are either directlyencouraged to drop-out, or leave as a result of sheer boredom. Given thehighly stratified nature of most South Asia villages, such selection proce-dures are not likely to be made on a purely meritocratic basis: children oflarger landowners and other important community members are far more likelyto receive at least the minimum attention required to sustain interest. 1/

In spite of the operation of this discriminatory but perhaps inevit-able selection process, the evidence seems to indicate that the sacrifice ofquantity has not resulted in acceptable levels of quality. Evidence on thelatter has been provided by the International Assessment of Education Achieve-ment. 2/ At the end of the primary period Indian children learned on averageonly 50% as much science and 48% as much native language reading as childrenin Europe, Japan or the USA. The median score in 15 countries on readingcomprehension was 26 with India's score of 5 ranking lowest. Given thesharply pyramidal structure of education in India in both enrollment and,inversely in expenditure, one might expect this gap to narrow after secondaryschool. Just the opposite occurs: by the upper secondary level, Indianstudents have apparently learned only 28% as much science and only 14% asmuch in reading comprehension. While there may be numerous problems withcross country comparability, these results must cast serious doubt on theadvisability of simply expanding the present educational systems in SouthAsia without thorough going efforts to implement improved curricula.

While this discussion of "internal" efficiency has drawn on evidenceprimarily from the education sector, other human resource sectors suffer fromquite similar problems. If anything, problems in the health and nutritionsectors are even more severe in terms of the inappropriateness of servicesavailable and reaching those most in need. Some of the problems which persistdespite plans and programs to the contrary are indicated in an interim evalua-tion of India's Integrated Child Development Services program where it wasfound more difficult to organize and implement health and nutrition servicesfor preschool children than to provide the educational inputs. One of themain reasons relates to the (again, understandable) lack of motivation on thepart of health personnel to seek out the population at greatest risk. Lackof critical equipment to identify and monitor the progress of such groups

1/ Girls also appear to be losers in this process as they suffer relativelyhigher drop-out rates at all levels through primary school. This is notthe case in secondary school, but those girls surviving that far canalready be presumed to be relatively advantaged or exceptionallydetermined.

2/ These data are reported in S. Heyneman, op. cit.

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undoubtedly contributes to this situation. 1/ The general pattern in bothhealth and education appears to be poor motivation among the staff who areresponsible for the delivery of these services compounded by a severe lackof complementary inputs and inadequate infrastructure.

Programs and Policy Alternatives for Human Resource Development

This section deals primarily with the situation in India andBangladesh. The policy dilemmas in these countries are quite analogous tothose in Nepal and Pakistan; however the latter two countries are eithercurrently facing, or have recently emerged from, a period of some politicaluncertainty, which renders analysis of their current plans somewhat morespeculative.

Both in India and Bangladesh human resource development programsare being considered in the context of five year development plans. A revisedversion of India's Draft Plan, 1978-83, has been prepared but will not beapproved until the Planning Commission is reconstituted following the changeof government in January, 1980. However, few changes have been made in thosechapters dealing with human resources. 2/ The Goverment of Bangladesh is inthe process of preparing a new five-year plan which will likely set certainobjectives in human resource development in education, and in a more limitedway, health, which - though unlikely to be achieved in the plan period - willprovide a direction and standard for judging financial and administrativecommitment.

The universalization of primary education is given prominence inboth the Indian and Bangladesh planning exercises. In India the objectiveappears in the context of a revised Minimum Needs program which sets theobjective that all children between the ages of 6 and 14 should be in schoolsby 1988. On the basis of class size norms approaching 50 the Planning Com-mission hopes to meet half the estimated increment of 72 million places

1/ GOI, Programme Evaluation Organization, Planning Commission, "Reporton the State of Preparedness of the Integrated Child Development ServicesProjects," New Delhi 1978.

2/ These form separate chapters in the case of education, health and familywelfare, and social welfare (including nutrition). Programs in theseand other sectors are also dealt with in the chapter on Minimum Needs.The primary change in India's current revised plan was the inclusion ofa strategy section for each minimum needs component. Unfortunately,these sections have not yet been made publicly available. Once thenew government is in place and settled, further revisions to the planwill undoubtedly be undertaken, necessitated by the deterioratingeconomic conditions of the past year. However, the Planning Commission,and the new Congress government, is likely to maintain a strong emphasison the Minimum Needs Program.

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through the formal system which would involve accommodating 18 million newentrants in existing classes and the creation of approximately 350,000 newclasses. The per pupil expenditure implied in this exercise is approximately$17.5 in the formal system and half that in the non-formal system. Thus thetotal incremental cost of universalization on the basis of Indi .'s currentplans could be as great as $3.7 billion (in 1978 prices) over the entire 10year implementation period. This implies a virtual doubling of current (1978)levels of plan expenditure on education, which though feasible, would requiredifficult decisions concerning reallocation from other sectors (assumingoverall plan resources to be fixed). Although similar (and perhaps misleading)precision is not yet possible in evaluating Bangladesh's objectives (pendingthe completion of the plan), the enrollment and dropout situation is such thatdespite excess capacity at some levels, the relative financial impact is likelyto be even greater. 1/

In rural health, India's plans are at a somewhat more advanced stagebut similar approaches have been put forward in both Bangladesh and Pakistan.Under India's revised minimum needs program a norm of one primary health centerper 50 thousand population with 10 associated sub-centers (1 per 5,000 popula-tion) has been put forward. By 1988 these goals would require the construc-tion and staffing of 6,241 primary health centers. On the order of 40,000sub-centers would be required by 1988. In addition the plan proposes upgrading2,400 primary health centers to become rural hospitals. Although the majorimplementation of these goals is planned for the 1983-88 period (ranging from.83% of rural hospitals to virtually all new primary health centers), the costof the 1978-83 program was estimated at almost $600 million. On this basis,the total cost could go as high as $6-10 billion (in 1978 prices). Again,relative costs in other South Asia countries desiring to achieve similar servicelevels are not likely to be much lower.

Of course, cost projections such as these can be misleading whenthere exists, as there does in South Asia, considerable scope for more effi-cient resource management within the sectors. But the ease with which sectoralreorganization can be undertaken should not be overestimated. Establishingeffective control over the provision of services is an extremely difficultand time-consuming task, even when objectives are well-defined and accepted.The sort of political difficulties which make reallocation from one sector toanother very problematic are just as likely to plague intra-sectoral reorgani-zation efforts. In this context there has recently been considerable attentiondevoted in South Asian countries, particularly India, to finding new, inexpen-sive, decentralized approaches to problems of poverty and human resource devel-opment. Such approaches are intended to complement and in some instancessubstitute for the expansion of traditional services as outlined above. Beforereviewing a few of the most promising programs, mention should be made of two

1/ For reasons apparent from the discussions above progress is also likelyto be quite slow unless some additional resources are committed to re-vamp existing but inadequate physical facilities. In addition, poorteacher training, non-supportive, in some cases, virtually non-existentsupervision, irrelevant curricula, and inappropriate promotional criteriafor students and teachers all contribute to implementation problems.

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general points concerning policies affecting human resource development inSouth Asia.

The first concerns one of the most frequently stressed points bythose in and out of government in South Asia, which is the crucial importanceof community participation/involvement. One could interpret this as a reali-zation of the key role of demand. If villagers become aware of the servicesthat should/could be available to them, they can play a major role in determin-ing the success of appropriate government programs. In contrast governmentprograms are generally dominated by supply considerations - the constructionof physical infrastructure, the (re)organization of government personnel, ingeneral, the delivery of services. In many sectors, this orientation ofgovernment to the supply side is less critical. Industry and agriculture are,ultimately, market-oriented activities which provide at least some feedback tothe users of government services. 1/ (In other sectors, e.g. defense, govern-ment itself is the consumer). But few human resource development programs, nomatter how well-conceived, can raise public welfare without being utilized bythe intended recipients, that is, without there being expressed demand. 2/

Of course, the key role of community involvement is in no way a novelobservation. It underlay the formation of panchayati raj and the communitydevelopment movement in India and, more recently, gave impetus to the emphasison "block-level" planning in the context of the sixth five-year plan. Butwith some notable exceptions, few policy interventions have been successfulin generating effective local demand. The observation is often made in SouthAsia that the linkages among various aspects of human resource development aresufficiently great so that one successful program could have possible spin-offs in several directions, if the administrative capacity were there to meetnascent demands. For example, the inauguration of village water supply oftenfrees girls and women from an onerous and time consuming task. This measurealone can open the possibility for increased school attendance, for higherstandards of personal hygiene and improved environmental sanitation. Adulteducation programs can have considerable impact on school attendance partic-ularly through the effect of increased adult literacy among women on the

1/ The term "market-oriented" could of course include a whole range oforganizational alternatives, but in every case imbalances are registeredwith reasonably appropriate signals of one form or another.

2/ There are exceptions: the malaria-eradication program in India is anotable example of a successful supply-dominated activity which signi-ficantly improved the health status and productivity of Indians in allsocio-economic strata. The relatively loose connection between socio-economic status and mosquitoe bites as well as the primarily technolo-gical nature of vector control contributed to this success. However,even here "success" may have proved illusory in that subsequent retrain-ing and reassignment of malaria control personnel has been associatedwith a resurgence of the disease. Without community "demand", thereseems to be little permanent effect of policy interventions with theresult that maintaining an effective service becomes a continuing andlarge drain on manpower and fiscal resources.

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school enrollment of girls. However, it is unfortunately clear that no singleprogram is going to promote these linkages universally across South Asia. Thephysical and socio-economic environment varies so greatly that decentralizationbecomes imperatve. It would appear that a successful strategy of humanresource development must focus on identifying and delivering a very limitednumber of servIces well and must begin by generating or meeting the demand forthose services than can be delivered. 1/

The second general issue which has been repeatedly stressed in thisanalysis and which is also an important aspect of the community participationproblem is the involvement of women in human resource development programs.It is a striking fact that women and girls constitute a vastly disproportion-ate share of those who must be reached if primary school enrollment is to beraised, if infant and child mortality is to be brought down, if adult literacyis to be spread, and if the productivity of landless laborers and other espe-cially disadvantaged groups is to be raised. Here again, the recognitionof the problem is banal; it is rather its complexity which is insufficientlyappreciated.

In rural areas of Pakistan, across northern and central India, toBangladesh, a large majority of young girls and even married women are inacces-sible to even village based development programs. When girls are normallywithdrawn from school by age 8 or 9 and often remain in virtual seclusionuntil they are married 4 or 5 years later, there is little headway to begained by pressing for expansion of the male-dominated primary school systemas it currently exists. Nor can one argue for the greater posting of womenteachers, which could charge the situation, given current conditions of ruralvillage life. There are similar and equally daunting problems in meeting thehealth needs of young mothers and children which, by all accounts, constitutethe sub-continent's single greatest health problem. Although village healthworkers or volunteers can make an impact in the delivery of many needcdservices, they are quite unlikely, as the programs are currently conceived inIndia or Bangladesh, to improve maternal and child health. 2/ As with communityparticipation in general, no clear uniform courses of action to overcome theseproblems can be recommended. Strategies must vary with local (district or

l/ For example, the reorientation of health services away from curative,symptomatic treatment toward a preventive and epidemiological focus isgoing to be continually frustrated in South Asia until the health demandsof villagers are met in a way which can both provide for symptomatictreatment and create a demand for preventive (including, of course,nutrition and MCH) and epidemiological measures.

2/ There are two main reasons for this pessimistic view: (i) the trainingof community health volunteers has virtually no input on MCH and nutri-tion and (ii) CHV's are 98% men. In principle, both these factors areremediable, but in practice there are significant administrative, andsocial factors which underlie the current situation and inhibit rapidchange.

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state) circumstances. The one thing that can be argued is that fittingstrategies to circumstances will itself require a much greater devolutionof responsibilities and resources.

Recognizing this need for a more decentralized approach, the Gov-ernment of India has in the past few years initiated several new programswhich are intended to become major instruments for human resource development.Most notable among them are the following:

(a) Community Health Volunteers Scheme - approximately 100,000volunteers have been "trained" of whom virtually all aremale. The program appears to have high community accept-ability and is well suited to certain-tasks such as chlori-nation of wells in addition to basic symptomatic treatment.However, major weaknesses remain in training, follow-upsupport, and basic orientation of volunteers. The program isstill dependent on strength of local institutions (effectivevillage panchayats), but its potential should be rated high,particularly if women can eventually be involved as"co-volunteers" so that important groups at risk, mothersand young children, can be reached.

(b) National Adult Education Program - coverage has been extendedto approximately 100,000 villages involving nearly 30 millionparticipants. Literacy programs are self-targeting in thatilliterates who will attend such centers are almost all fromgroups which are socio-economically disadvantaged. The programhas made greater progress than CHV's in reaching women, buttraining of volunteer instructors is currently very weak,resulting in low efficiency as many participants quicklylose unreinforced skills. Program potential is high if notco-opted or otherwise undermined by village elites. One ofthe major benefits of a successful adult literacy programwould be an increased demand for primary education forchildren of newly literate adults. This could lead togreater community involvement and support to the educationsystem.

(c) Antyodaha - although only indirectly related to human resourcesectors as education and health, this community orientedpoverty alleviation program aims at identifying succes-sive waves of the five poorest families in each village andbringing them up to the minimum income level. This programis one of the most innovative and potentially far-reachingefforts at making development programs serve the needs ofpoor; however, it depends on strong political leadership towin community support and promote consensus. Follow-upmeasures to help families utilize new assets have beenidentified as seriously weak.

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(d) Finally, it should be noted that undoubtedly the largestand most significant adult education program in India isthe training and visit system in agricultural extension.This program has brought to approximately 30 million Indianfarmers 'the most recent field techniques available for in-corporating relevant agricultural research. This "on-the-job training program" in agriculture has had direct andhighly significant effects on agricultural productivityfor small as well as large farmers.

Future Policy Options. Even if planners in South Asia were con-vinced that a greater share of public investment resources in South Asiashould be devoted to human resource development, it seems quite clear thatplans for expansion based on current, traditional programs in health andeducation would gobble up such funds with little chance that appropriateimprovements in services and outcomes would materialize for those who areespecially disadvantaged: women, the landless, others of particularly loweconomic or social status in rural areas. One approach does seem to liein programs such as those discussed briefly above which attempt to create asense of community participation and responsibility for health and educationoutcomes. These programs are relatively low cost; but they will, as theuneven progress with the training and visit system in agricultural extensionhas demonstrated, encounter obstacles other than finance as they confrontvarying local circumstances. The degree of administrative commitment requiredto overcome these must exceed that of normal programs while actual programsize and "clout" will be a fraction of the bureaucratic establishment.Nevertheless, as the rapid initial progress with community health volunteers,adult education, and to a lesser degree, the Antyodaha scheme, and the con-tinued success of the training and visit system demonstrate, human resourcedevelopment schemes which are sensitive to community needs receive widespreadacceptance and support.

In terms of overall development strategy human resource developmentmust be considered in the context of competing investment priorities. Giventhe levels of poverty and relatively slow growth performance of the SouthAsia region, high priority must be given to increasing the rate of growth inthe agricultural sector which provides the livelihood for around two-thirdsof the region's population. But it is also clear that even rapidly growingagriculture will not provide jobs for the increment which will augment thelabor force in the next twenty years (consisting largely of individuals alreadyborn). Consequently, policies and investment which will encourage a morerapid industrial transformation of the region's economy are crucial. Thesewill primarily involve public investments in infrastructure and key industriesas well as appropriate industrial policies to encourage the private sector(assuming that the current mixed economy framework is maintained). An impor-tant aspect of this infrastructure is the stock of human capital. There wouldappear to be considerable scope for improving the efficiency of investmentsin the human resource sectors of education and health which, although notnecessarily easy to implement, should be fully exploited before evaluatingwhether large shifts in public investment priorities should be undertaken.But before that point can be reached, marginal adjustments in priorities maybe required because, first, more resources may be necessary to facilitate the

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intra-sectoral improvements in efficiency that are advocated here and second,there is evidence that investments in basic education have yielded averagereturns greater than the cost of capital while having numerous desirablespin-offs affecting fertility, health, and general modernization. There isa presumptior too that improvements in health status can have direct produc-tivity effects given the serious incidence of morbidity even among those ofworking age and these benefits again combined with effects on fertility wouldyield quite significant returns if they could be appropriately valued.

Governments, however, also have distributional objectives, andthese are particularly'prominent in South Asia with its predominance of theworld's poor. As it is clear that individuals readily choose better healthstatus and more education as income levels rise, governments in South Asiahave expressed objectives of providing services adequate to enable all thepopulation to attain minimum levels of-educational and health status. Al-though distributional objectives may be paramount there is also the realizationthat substantial numbers of the poor have few resources beyond their own laborwhich can be directly augmented. With limited employment prospects for un-skilled labor, human resource development can potentially play an importantredistributive role which would also serve to raise its social rate of returnas a productive investment. While expenditures on some programs such as basiceducation or literacy are self-targetting in this respect, other programs,particularly in the health sector will likely require administrative reorgan-ization and strict monitoring if they are to serve this dual function ofredistribution and investment. The danger of program co-opting by traditionalelites, which remain a potent force in rural South Asia, and by urban middle-classes requires careful evaluation of wholesale expansion with a presumptionthat a selective approach to human resource development programs can lead toboth the more productive utilization of manpower which is the crux of develop-ment and to an acceptable minimum standards of nutrition, health and educationfor the half billion poor of South Asia.

PART IV

POVERTY AND HUMAN DEVELOPMENT IN THEMIDDLE EAST AND NORTH AFRICA

Prepared by: Basil G. Kavalsky, EMENA Country Programs I

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Table of Contents

Page No.

A. Income Levels of Poverty ............................. 143

B. Demography and Poverty ............................... 148

C. Nutrition and Poverty ................................ 150

D. Health and Poverty ................................... 153

E. Education and Poverty ................................ 156

F. The Urban/Rural Contrast ............................. 160

G. The Male/Female Contrast ............................. 162

H. The Impact of Migration .............................. 163

I. Eliminating Poverty i.' the Region .... ................ 164

J. Some Conclusions and Questions ....................... 169

Table I. Absolute Poor in the MENA Region in 1977 ...... 145

Table II. Life Expectancy and Availability ofMedical Personnel in Selected MIENACountries in 1977 ............................. 173

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A. Income Levels and Poverty

In 1977, the 215 million or so inhabitants of the Middle East andNorth Africa (MENA) had per capita incomes on average of $1,332 in prices ofthat year. The presence within the group of some oil-producing countries withincomes in excess of $6,000 leads to a considerable overstatement of thisaverage however. If one excludes Saudi Arabia, Kuwait and Libya, the averagein 1977 falls to $1,009 per capita. Of the 16 countries in the region withpopulations of more than 1 million, only one falls into the WDR classificationof low income (Afghanistan), while the 12 other countries in the group, i.e.excluding the three oil exporters cited above, are all middle income. Therange of income levels within the countries of the MENA region can be seenmore clearly from the following classification: First, the low income MENAwith incomes from $190 to $600 per capita at 1977 prices (Afghanistan, Egypt,People's Democratic Republic of Yemen, Yemen Arab Republic and Morocco);second, middle income MENA with a range from $600 to $1,200 per capita (Jordan,Tunisia, Syria, Algeria, Turkey and Lebanon); third, high income MENA (Iraq at$1,550 per capita and Iran at $2,160).

The decade of the seventies has been a good one for most of thecountries of the MENA region. In the period between 1968 and 1973 the highrates of growth in Northern Europe provided a market for large exports oflabor and agricultural products from Turkey, Tunisia, Algeria and Morocco.Since end-1973 the oil receipts which have flowed into the region have spilledover into a large number of non-oil producing countries as well. Largenumbers of workers have gone from Egypt, the YAR, PDRY, Jordan, Syria andAfghanistan to Saudi Arabia, the Gulf states, Libya and Iran. The remit-tances of these workers have become a major source of foreign exchange earn-ings for the sending countries. In addition there have been direct transfersof both official and private capital mainly from Saudi Arabia, the Gulf statesand Libya to Egypt, Syria, Jordan, Morocco and the YAR. During the sixties,growth in the region was 5 percent per annum, during the seventies it hasspurted to 7 percent. Looked at on a per capita basis this is even moreimpressive since it means that, during the seventies, annual growth of percapita income has been almost double the level of the previous decade.

The benefits of the rapid rise in regional income are perhapsless apparent for the poor of the region, or at least for those poor who areunable or unwilling to migrate. In the absence of specific government programs,higher income for the poorest groups depends primarily on the emergence oflabor scarcities and the consequent bidding up of rural wage rates. This hasindeed happened in some countries, most notably the YAR. 1/ It is a moot

1/ One might theorize that a limit will be reached when rural wage ratesbecome competitive with the returns from small-holder farming by tradi-tional methods at which point there would be an enormous increase in thelabor supply in these countries.

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point whether the rise in money wages has in all cases been sufficient tooutweigh the rise in prices of those products which are in demand in the highincome areas. Demand from Iran for example, has led to sharp price rises foragricultural produce in border areas of Afghanistan. Although wage levels inthese areas have risen as well it is not clear that the very poorest groupsare better off. Worker remittances and high domestic growth rates may resultin an increase in the relative prices of those food items which are highlyincome-elastic, and leave individual families worse off rather than betteroff.

The question of how the relative and absolute incomes of the poorchange over time as the economy grows has not been much addressed in the MENAcountries, perhaps because of the scarcity of data for individual countriesover a significant period of time. One might take a cross-section ofcountries at different income levels as a proxy for a single country timeseries. In Afghanistan, the absolute poverty cut-off in 1977 for ruralareas was $85, in Egypt $150, in Morocco $200, and in Turkey it was estimatedat about $230, per capita. 1/ It is not clear to what extent this reflectsrelative price differences and to what extent it simply reflects inadequatedata and different assumptions made by those who have done the calculations.Since the ratio of income between Afghanistan, Egypt and Morocco is not verydifferent from the ratio of the poverty cut off point, this suggests that thereal cost of the bundle of goods which the poor consume rises with per capitaincome growth up to a point where the income elasticity of the productsconsumed by the poor begins to decline. A country might therefore need to getrather far up the income scale before growth without any change in incomedistribution has an impact on the living standards of the poor. It would beinteresting to review a much larger sample to see how robust this interpre-tation might be.

How many absolute poor are there in the MENA countries? This hasindeed been one of the most difficult areas of judgement. I have attemptedto get a qualitative and/or quantitative assessment from those who are familiarwith individual countries, but in many cases the paucity of data reducesthe exercise to informed arbitrariness. I offer the following numbers only asrough estimates providing a starting point for future refinement and investiga-tion.

1/ The definition of poverty cut-off is the standard one used in the Bank;the cost of providing minimum calorie requirements inflated by non-foodexpenditures of the 20th percentile.

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Table I: NUMBERS AND PROPORTION OF ABSOLUTE POORIN THE MENA REGION IN 1977

Country(ranked by per capita Total Pop.income, starting from (mid-1977) Absolute Poorlowest) (millions) (millions) %

Afghanistan 14.3 5.7 40Egypt 37.8 10.0 26PDRYemen 1.7 0.4 24YemenAR 5.0 0.7 14Morocco 18.3 7.0 38 lbJordan 2.9 0.2 7Tunisia 5.9 1.0 17Syria 7.8 1.2 15Algeria 17.2 3.0 17Turkey 41.9 8.0 19Lebanon 2.9 0.6 /a 21Iraq 11.8 1.5 13Iran 34.8 8.7 25Others 11.3 _

Total 213.6 48.5 23

/a Mainly displaced Lebanese and Palestinians.

/b Very tentative.

If figures were available for 1960 they would probably show a very impressivedecrease in percentage terms and judging what one knows of individual coun-tries, a small decrease in absolute terms as well. In 1960 the region had atotal population of 137.3 million. If the same number were poor in that yearas in 1977, the proportion would have been about 35 percent. There haveprobably been notable declines in the numbers of poor in the YAR, Jordan,Tunisia, Syria, Algeria, Iraq and Iran. In the remaining countries in theregion the number of absolute poor has probably risen, but in all cases exceptAfghanistan and PDRY, the percentage of the population which is poor hasalmost certainly fallen. In Afghanistan the percentage of absolute poor in thepopulation has probably remained the same. PDRY is a rather special case sincethe removal of substantial exogenous income from the port and military base inAden, may have resulted in an increase in both the percentage and numbers ofthe absolute poor. The varying degrees of success achieved in reducingpoverty and their relation to the strategies pursued are the key to the studyat hand.

It is of course the relationship between the level of per capitaincome in a country and its distribution which determines the numbers of theabsolute poor. The bottom quintile in the MENA region receive between 3

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percent and 7 percent of total income in the countries of the region, i.e.the average income of the bottom quintile is between 15 and 35 percent of thenational income per capita. In Afghanistan one would need an income whichis 45 percent of the national average in order to move out of the povertycategory. At Turkey's income level, about 20 percent of the national averagewould be sufficient, however, in Turkey the bottom quintile receive only 17percent of the national income per capita, so that the numbers of the absolutepoor in Turkey remain high. Tunisia which has a per capita income of $860compared to Turkey's $1110, nevertheless has a smaller percentage of absolutepoor since the bottom quintile in Tunisia receives on average 25 percent ofthe national per capita income or $215 as compared to $190 in Turkey.

Who are the 50 million or so poor in the MENA countries? Thebroad characteristics differ little from other regions. In almost everycountry where six or more people are dependent for their consumption needson the earnings of one major wage earner who derives his living from unskilledlabor in the agricultural, construction or urban informal sector 1/, the chancesare that the family will be part of the absolute poor, unless they are assistedby other members of the extended family. Similarly those who own farms lessthan a ratio of land to family members which differs from one situation toanother, will be poor. 2/ A similar relationship could be derived from theratio of the turnover of petty traders to family size. In addition there arecertain poverty problems which are almost structural in nature, such as somegroups among the Palestinian refugees and those displaced by the war inLebanon who remain in camps, various relatively isolated tribal groups andlarge proportions of the nomadic population.

There are some grounds for thinking that movement both in and out ofthe absolute poverty category may be greater than in other regions. Years ofdrought are a factor in MENA (as they are also in Africa, but less in EastAsia and Latin America). These are particularly serious for the many inthe region who depend on livestock. Herds are often decimated through thedestruction of natural vegetation in years of drought. Small farmers as inother regions may have to borrow at high interest rates to tide themselvesover such periods and there will be less work for the landless. As againstthis traditions in the MENA countries place considerable responsibilityon the rich to help poor relatives and others during such periods. The lifecycle of the family is also a factor. Older children until marriage contributeto the family's total income so that a family with a few wage earners will bebetter off at least for a period of time. The marriage itself however may bea source of impoverishment through large dowries paid from borrowed funds.

1/ The urban informal sector ranges in Cairo for example from the artisanto the pickpocket, but does not include those unemployed who can affordto wait for a suitable job to come their way.

2/ In Afghanistan for example a family of six needs for subsistence 21hectares of dry land, or from one to five hectares of irrigated landdepending on cropping patterns.

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A composite picture of a poor MENA family might look like this.Mansur the head of the family is about thirty-seven years old, his wifeWaheeda about nine years younger. They have been married for thirteen yearssr.d have five curviving children out of seven. Mansur's mother and onedivorced sister live with them. Neither Mansur nor his wife went to school.The eldest boy attended the government school in a village two kilometers awayfor three years but has not gone back since he has begun to earn some incometending a richer neighbor's sheep. Mansur is a laborer and has no land.Meals for the family are mainly wheat bread with beans cooked in' oil or someonions, yogurt, and tea with sugar. In the season there may be melons and onspecial occasions some mutton for dinner. The house has two or three smallrooms and the family cooks inside in the winter for warmth and outside in thesummer. There is no furniture in the house just an old carpet which ispractically worn through. There is a large town ten miles away and a directbus and Mansur has occasionally found some casual employment there during theoff-season. He has heard talk in the village that there are jobs in othercountries and the unmarried brother of one of the farmers who employs himduring the harvest season went away and returned with enough money to beginthe construction of a new house. But Mansur cannot leave. His two brothersare also farm workers and cannot support his family as well as their own. Inany case how would he raise the money for the trip and for the payments which'he has been told he will have to make to the border officials along the way.

There is little question that poverty in the MENA region is' concen-'trated in the rural areas. Roughly 44 percent of the region's populationis defined as urban (93.3 million). The evidence is that only about 20percent of the region's poor at the outside would be in urban areas. Theurban poor seem to be concentrated in Egypt and to a lesser extent Turkey,Algeria and Morocco. The main reason for lower urban poverty is that themajor increases in national product are accruing in these areas at a ratewhich is greater than migration into these areas, and the relatively efficientfunctioning of the urban labor market allows increased income to be translatedinto new employment opportunities. Of course higher urban incomes than rural(e.g. in Egypt median urban incomes are 40 percent above median rural incomes)may be compensated by higher urban costs, particularly food. It is the policyof many governments in the region however to provide substantial subsidies forfood. These subsidies often make the cost of food in urban areas not verydifferent from the ex farm prices that small farmers in the rural areas wouldbe able to get i.e. the government absorbs the middlemen's costs and margins.Since it is these margins which typically make it necessary to earn a muchhigher wage in urban than in the rural areas to achieve the same standard ofliving, the differentials may be somewhat lower in this region than in otherparts of the world.

The rural poor appear to be regionally concentrated to a surprisingextent. Often they are in the more remote areas where land distribution isuneven and/or less land is irrigaterd. Eastern Anatolia in Turkey, the South ofTunisia, Upper Egypt, are all well known examples of poverty concentrations.The plight of landless laborers in these areas is particularly distressing.Agricultural wages tend to be low. Labor markets are fragmented in ruralareas and there is little information on where excess demand for workers is

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located. In Morocco one of the main causes of low productivity of landlesslaborers was found to be the distance and time between places of employmentcombined with this lack of information. In addition subsidized foodstuffsoften do not reach them. Egypt is an example of a country where ruralworkers probably pay more for some basic food items than urban workers.

On balance then, while poverty in the MENA region is probably dimin-ishing relative to population, there can be little cause for complacency.Poverty remains a significant problem affecting one out of every five peoplein the region. In addition, as we will see later, for any given level ofdisposable income, the health and educational status of the population of theMENA countries is probably somewhat lower than in similar countries in LatinAmerica or Asia.

B. Demography and Poverty

Population growth in the MENA region has averaged 2.6 percent perannum between 1960 and 1977. These rates are high historically for the regionand comparable to those in the middle income ldcs in Africa and Latin America.By the end of this century, the population in the region will have risen from213.6'million in 1977 to something of the order of 364 million. While theprojections assume a lowering of the percentage increase over the past, thenumber of additional people is the factor which creates concern. Whereas inthe past twenty years something of the order of 85 million people were addedto the region's population, the next twenty years will see the addition ofabout 145 million. It is going to be very difficult to tackle the absolutepoverty problem in that kind of situation.

In every country in the region, the percentage fall in the birthrate from 1960 to 1977 was less than that of the death rate. Only in threecountries was the absolute fall greater in the case of birth rates than deathrates: Turkey, Tunisia and Lebanon. In seven countries there was virtuallyno decline in birth rates between 1960 and 1977: Afghanistan, PDRY, YAR,Jordan, Syria, Algeria and Iraq. 1/ Of nine countries in the world with totalfertility rates still above 7.0 in 1977, no less than six of them are in theMENA region: PDRY, YAR, Jordan, Syria, Algeria and Iraq.

There is one element that could make the picture even worse. Theregion lags badly in the sphere of infant mortality. Infant mortality ratesare over 100 per 1000 births in four of the most populous countries in theregion: Turkey, Egypt, Morocco and Iran. It is in large part for this reasonthat life expectancy at birth in the region still lags considerably behindother middle income ldcs. It is above 60 years only in Turkey, Lebanon andKuwait; and below 50 years in Afghanistan, PDRY, YAR and Saudi Arabia. Infant

1/ Demographic data in the cases of Afghanistan, PDRY and YAR are so weakthat the conclusions should be regarded as tentative in these cases.

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mortality can and should be substantially reduced in these countries and if itis then there might well be a spurt in population growth, though it couldreasonably be argued that the sorts of factors which will lead to lower infantmortality are also those which lead in turn to lower birth rates (better edu-cation of women and access to health facilities).

How do high rates of population growth impact on poverty in theregion? First there is the very obvious link between population and socialservices. Even with rather high proportions of government expenditure onhealth and education in the countries of the region, governments are far fromachieving full coverage of the population - Tunisia and Morocco are goodexamples. High rates of population growth simply delay the achievement offull coverage and since by and large the poor are at the bottom of the waitinglist for facilities the delay will be greatest in their case. Substantialgovernment subsidies for health and education services, which in almost everyMENA country benefit the better-off disproportionately, compound the cost ofexpanded coverage in the context of rapid population growth. Another factoris the employment problem. Large annual additions to the labor force are verydifficult for most of these countries to absorb into their modern sectorswhich begin from a rather limited base. There is a fair amount of unemploymentin countries such as Turkey, Egypt, Tunisia and Iran and decided slack inMorocco and Algeria, if somewhat less open unemployment. This is an increas-ingly serious problem for the countries in the region especially when it isremembered that female participation rates in the MENA countries are expandingvery rapidly from an extremely low base. One calculation in Algeria suggestedthat a 9 percent GDP growth rate would be required until the year 2000 tocreate employment for all the additions to the labor force if present trendscontinue. This problem may become explosive in the MENA region if and whenthe oil-producing countries can no longer absorb the additions to the laborforce and must even begin to repatriate existing workers as has happened inNorthern Europe already.

But the costs of rapid population growth are not only apparent atthe macro-level. Within the family as well there are serious implications.One very clear instance is the evidence of malnutrition in children betweenone and five years of age. The children are transferred to an unsuitable diettoo soon, since the mother must begin to feed the new addition to the family.Better spacing of births would improve this situation. The ability of parentsto select appropriate points in their lives for having children can lead to animmense improvement in the quality of life, which is only incidentally relatedto the question of the eventual size of the family. By choosing to delaybirths at certain points, they may be able to improve the family's long-termeconomic viability and the education and nutrition of individual children, toa considerable extent.

The governments of the region seem to be increasingly aware of theimportance of mounting effective population control programs. The mostimpressive performance in this field is that of Tunisia where the achievementshave been striking. Egypt is also a positive example, though the commitmentof the government to the programs has been questioned at times in the past.In Turkey, population growth declined substantially despite the lack of

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enthusiasm of the government. The latest convert to the importance of popula-tion planning is Morocco. Attitudes in other countries have been quite mixed.The size of a country's population has sometimes been confused by leaders ofthe MENA countries as being synonomous with its power and world-standing.O~' vra however there does seem to be a trend of growing awareness of thestrains which population growth might impose on these societies. And thepotential impact of programs is much more significant than is sometimesrealized. Tunisia, with considerable population pressure on arable landresources began a program in the early sixties when its population wasabout 4.5 million. By the year 2000 its population will have grown to 9million. But if its population had grown since 1960 at the same rate asAlgeria, it would have had 14 million people in the year 2000. SimilarlyTurkey would have had 91 million people instead of the 64 million which is nowprojected, and, perhaps most terrifying of all, Egypt would have had 86million instead of the 58 million now projected. These reductions are ofcourse only in part of consequence of official population control programs,but the Tunisia case clearly shows how much impact government efforts in avariety of areas related to improved educational and employment status ofwomen as well as family planning itself, can have.

C. Nutrition and Poverty

One of the most important consequences of the foreign exchangeresources which have flowed through the region since late 1973 has been toenable governments in the region to increase the import of food supplies.Iran and the YAR provide good examples of this. Probably only Afghanistanand perhaps PDRY now remain below 100 percent of the estimated average percapita needs. 1/ In at least three countries in the region, food imports in1976 were more than one-quarter of total imports: Egypt, YAR and Jordan whilein others particularly the oil-producing countries, food imports are a veryhigh proportion of total food consumption, though a lower proportion of totalimports. Only the South Asian countries have similar dependence on importedfood. In most of the remaining countries of the region, food imports werebetween 10 and 20 percent of total imports in 1976, still a high proportionby world standards. Only Turkey was significantly below this with a mere 3percent of imports being food items.

The figures for total agricultural production in the MENA countriesare an adequate proxy for food production. Since 1970 agricultural growth hasbeen particularly disappointing in Morocco and Iraq where it has been virtuallystagnant. It has more or less kept pace with population growth in Afghanistan,Egypt and Algeria and has slightly exceeded it in Turkey. It has substantiallyexceeded population growth in YAR, Tunisia, Syria and Iran, although thefigures for the last-mentioned have been seriously questioned. It is difficultto draw conclusions of any kind from this rather mixed pattern. I suspect

1/ World Development Indicators gives a figure of 88 percent for Algeria.This is regarded as incomprehensible by those who know that country.

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that a conclusion that food production per capita remained constant in thepast decade, but that larger imports have increased food availability percapita, despite a population increase of 2.6 percent per annum, wouldbe correct.

Has this increase in food reached the poor? The answer to thatquestion depends on the price at which food is sold relative to the incomes ofthe poor. As far as the urban areas are concerned there is little doubtthat food is reaching those who need it. This is in part because in almostevery country in the region food prices are subsidized by governments. Theextremes are represented by Afghanistan where subsidies are limited to govern-ment civil servants and Egypt where massive food subsidies on a large numberof food items account for about 5 percent of GNP and a sizeable share ofgovernment current expenditures. Subsidies are also important in Algeria,Morocco, Syria and of course all the major oil exporting cbuntries in theregion. A wide range of products are subsidized. The grain staple is sub-sidized in every country. In most there are subsidies for cooking oils aswell. Other commodities which are frequently subsidized include tea, sugar,kerosene, onions and some meat items. The package of food products is orientedto the consumption of the urban consumer and by and large does assure him ofsupply of a wide range of food items at a price within the reach of a modernsector worker. The urban poor (the unemployed and informal sector workers)would be able to get the staple at a price which is within their range. 1/The subsidized commodities often do not reach the rural areas however.This may be less important for the staple which is available at least afterthe harvest at prices which may be competitive with subsidized prices in thetowns. But it is important for the other commodities and during the off-season.

The other side of the coin of food subsidies are guaranteed pricesto farmers and heavy subsidies on inputs. In theory such an income transferto the rural areas should bid up the wage rate and enable the rural landlessto share in higher income as well as providing additional income to small, butsurplus farmers. In practice this has not been the case. The subsidiesbenefit disproportionately the larger farmers who make use of these inputs.In addition one of the most potent subsidies is the availability of cheapcredit which has led to a rash of mechanization in many countries of theregion. Turkey is a good example of this. This in turn reduces the demandfor unskilled labor on the farm.

The rural poor derive little or no direct benefits from massive gov-ernment expenditures on subsidizing food and agricultural inputs in the MENAcountries. That these subsidies persist nevertheless is of course a function

1/ Though even in their case supply may be a problem. The bakeries inEgyptian cities are often sold out of subsidized bread within an houror two of opening in the morning. The rich can send their servants toqueue, but the poor may be at work during those hours.

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of the political weakness of the poor in the rural areas. The urban poor area far greater political risk and are often able to resort to popular actionto exert pressure on governments. The food riots in Egypt in 1977 whichsucceeded in reversing a decision to reduce the level of subsidies providedclear evidence of this. The political influence of large landowners in somecountries has been a major factor in the high level of agricultural subsidies.Analysis done in one or two countries in the region shows that the rural poorcould be helped to a far greater extent by programs directed specifically atrural development if moneys used for food subsidies could be channelled intothese programs. One of the approaches often suggested to reduce the budgetaryburden of food subsidies is to target them to the poor rather than to subsidizeindiscriminately. Unfortunately no country in the region has as yet been ableto overcome the political and administrative constraints to doing so.

School feeding is often a very effective means of overcoming nutri-tional deficiencies of some of the most vulnerable groups. In countries whereenrolment is less than 100 percent of the age group, and this is true for mostof the countries of. the region, especially for girls, it is usually thepoorest that are not enrolled in schools, so that feeding schemes are notalways effective in helping them. However it is a program which has the dualbenefits of both overcoming some of the opportunity costs of primary educationto the poorest families, and also directly promoting the nutrition of children.It therefore deserves consideration in rather more countries in the regionthan at present. There are major administrative and financial constraints tothese programs of course, and they should not be entered into lightly withoutadequate provision for staffing and recurrent costs. It would seem to be worthsome effort to see whether low-cost, easily administered programs can bedeveloped in this area. The efforts of Algeria, with its nationwide schoollunch program, merit closer study in this regard.

It was pointed out in the previous section that malnutrition isnot solely a consequence of overall lack of calories. In the cases of Eygpt,Afghanistan and Morocco, it has been observed that when children are put onan unsuitable diet after one year, because the arrival of a new baby meansthat the mother stops breat-feeding the older child, there is serious malnutri-tion in the child which only begins to reverse itself from age 3. 1/ It isnot clear whether there are longer term consequences of this deprivationduring childhood. This is a matter of post-natal and general education, aswell as family planning services. The prevalence of food and water-borneparasites in areas where hygiene standards are low also means that the fullbenefits of food consumption cannot be derived by the individual. The linkagesbetween nutrition and other basic needs have been particularly neglected inthe MENA countries. In Egypt, for example, where over one million pre-schoolchildren suffer from chronic malnutrition (17 percent of the total), theproblem is greatly exacerbated by the fact that 30 percent of all childrensuffer from communicable diseases at any given time and thus cannot derive thefull nutritional benefit from the food they consume. Once again these problemsare far more likely to face the poor in the region, than the better off.

1/ In Morocco the mother stops feeding as soon as she is aware that sheis pregnant again, since custom says that continued feeding will harm thechild in the womb.

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There is still a serious nutritional problem among the rural poorin the MENA countries. This is not a question of famine and starvation exceptperhaps in Afghanistan where, given the very undeveloped nature of the fooddistribution system, starvation can become a reality in drought years as wasindeed the case in 1970 and 1971. In the other countries in the regionhowever, sufficient foreign exchange resources have more or less ensured thatfamine has been consigned to history. But not malnutrition alas. The exampleof Egypt where recent figures put the per capita per diem food availability at3000 calories (the FAO minimum for Egypt is 2350), yet sizeable pockets ofmalnutrition persist, is evidence of the fact that increased food availabilityalone will not be enough to solve this stubborn problem. The linkages withincome distribution, health and education must be explored further.

D. Health and Poverty

If life expectancy at birth is an adequate proxy for health standards,then the MENA countries have done extremely well in the period between 1960 and1977. The weighted average life expectancy at birth has improved from 46 yearsof age at the beginning of the period, to 55 years at the end. This compareswith an improvement for all middle-income countries from 53 to 60. As isevident the MENA countries started from a lower base than the middle incomecountries in Latin America and East Asia for example, but have in some casessubstantially reduced the deficit and in others at least maintained theirposition. It is surprising how uniform their progress in the period has been.Even in the worst case, Iran, life expectancy at birth rose from 46 years to52 years, while in the best cases, the Yemens, it went up from 36 years to47 years.

There is no great secret about why this improvement has taken place -

the elements have been well documented and relate to better nutrition andeducation, control of epidemic diseases, increased access to safe water,spread of medication and health facilities, better standards of hygiene, etc.The WDR publishes figures which show population per physician and nursingperson in 1960 and 1977, and it is tempting to try to relate these to what ishappening to health in the countries of the region. The picture which emergesfrom doing this is a confusing one however, as Table II indicates.

Table II: LIFE EXPECTANCY AND AVAILABILITY OF MEDICALPERSONNEL IN SELECTED MENA COUNTRIES IN 1977.

Life Expectancy Population per Population perCountry at birth (years) Physician Nursing Person

Egypt 54 1,190 1,150Morocco 55 11,100 1,700Jordan 56 2,250 930Tunisia 57 4,800 1,070Syria 57 2,510 3,810Algeria 56 5,590 1,560Iraq 55 2,530 3,010Libya 55 1,020 290

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The figures certainly seem to suggest that the numbers of doctors and nursesmatter little to overall life expectancy. Of course there are all sorts ofpossible explanations; the most obvious one is the lags which are inherentbztween increasing the number of medical personnel and having an impact onlife expectancy. It could also be argued, convincingly I think, that thequality of life is not taken into account adequately by the life expectancyfigure alone and that the role which medical personnel and facilities play inreducing the pain and discomfort of ailments is equally significant.

One area where one would have expected the availability of medicalfacilities to have had much more of an impact is infant mortality. As explain-ed earlier, rates of infant mortality remain extremely high in some of thelarger countries of the region. Data reliability is an enormous problem inthis field and there must be some suspicion that better data would indicatethat the problem is more serious than the figures suggest in most countriesof the region. For all those countries in the region where figures are quotedin Bank sources, the estimates are very near to 100 deaths per 1,000 births oreven substantially above that - the figure rises to nearly 1 death in every 4births in the case of Afghanistan and 1 in 6 in Morocco. The failure of evena rather advanced country like Turkey to reduce its infant mortality ratebelow 118 at the most recent estimate is extremely puzzling. 1/ Given theurban/rural distribution of income and health facilities in Turkey, thisprobably means that the infant mortality rate is something like one in fiveamong the rural poor of that country. And this would be equally true of othercountries in the region. An average infant mortality rate of one in ten meansa rate among the rural poor which is very much higher. High infant mortalityis a product of many factors most prominently nutrition and hygienic practices(the latter is simply a proxy for the education of the mother). In Egypt, 45percent of reported infant deaths are from diseases of the digestive system. 2/In Algeria the housing congestion with often 7 or more people to a room, makesit difficult to isolate small children from contagious illnesses of otherfamily members. The stubborn continuance of high rates of infant mortality inthe MENA countries is an important area for research. Unfortunately the exist-ing data in this area are very weak.

The figures for hospital beds are a little more reliable but maskimportant urban/rural discrepancies. In some countries in the region theuse of health facilities is often limited by the difficulties which women andchildren may have in travelling to them or in leaving home for extendedperiods. In some countries there is still reluctance among husbands to permittheir wives to be examined by male doctors, and of course, the number offemale doctors lags badly with their lesser enrolment in the education system.Studies in Afghanistan discovered a heavy bias towards adult male users ofmedical facilities. There is little doubt however among the peoples of theregion of the efficacy of modern medicine and particularly pharmaceutical

1/ The Turkish figure reflects accurate reporting however, while the apparentsuccess of a country like Egypt in reducing its infant mortality rate to112 per thousand i.e. below Turkey at less than 30 percent of Turkey'sper capita income, is probably mainly due to under-reporting.

2/ A recent study on Egypt makes the point that the simple medical techniqueof oral rehydration could prevent many of these deaths.

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products. A range of these are sold in the smallest village stores, includingsome which are only available by prescription in Northern Europe for example.

If figures were available, I have little doubt that they would showthat health status is still a serious form of deprivation for the poor of theMENA region. Even where the facilities and personnel seem to be available,they are often not located where the poor are, i.e. in the more remote ruralregions or near the urban slums or shanty towns (bidonvilles). Afghanistanwith about 1,000 doctors overall, has 800 of them serving the less than onemillion people in the capital city, while the other 200 are scattered amongthe other 13 or 14 million of its population. All the countries in the regionhave government health services, yet very few provide the kind of extra allow-ances and subsidization to doctors which would induce them to practice in theremote rural areas where they are most badly needed. Even if they can beinduced to go there, the logistical support which is needed to back them up isoften unavailable. In most countries the medical schools are in the largestcities, the medical students are from the wealthier sections of those cities,and when they are qualified they are expected to somehow want to go to easternAnatolia or Upper Egypt to practice. Inevitably what has happened has been adrain of Egyptian doctors to Libya, Saudi Arabia or the Gulf, Iranian doctorsto the U.K and U.S., and North African doctors and nurses to France. Meanwhilethe sizeable populations in the rural areas without adequate access to medicalcare go untreated.

The problems of the poor are not only a consequence of inadequatefacilities and personnel of course. They are the least educated section ofthe population and therefore the least aware of basic hygienic practices.Even if they were aware however, one wonders how much they would be able to doabout it. It can be quite costly to boil water in areas which are dependenton dung and wood for fuel; soap and detergent is similarly often beyond therange of the poor rural consumer. Improved nutritional practices usually meana more varied diet than the family can afford. Proper fuel for heating andbetter shelter would doubtless cut down the heavy incidence of respiratorydiseases in areas which are snowbound in winter such as central Afghanistan,parts of Iran and Turkey, and the mountainous areas of North Africa, butthese, along with warm clothing are also a matter of adequate incomes. Twentypercent of the incomes of the poor in rural Turkey is spent on fuel. It issometimes forgotten that of the very few developing countries with belowfreezing winter temperature perhaps half are in the MENA region.

Large expenditures on health in the MENA countries do not seem tohave had quite the impact on the health status of the poor which might havebeen expected. Almost every report on the subject written in the region hasargued that this is because the expenditure has been concentrated on rela-tively high quality curative medicine at the expense of the rapid expansionof preventive medicine. If that is the case, then it is certainly hard toaccount for the inadequacy and overcrowding in the large urban hospitals inmany of the MENA countries. These urban srvices are usually pro%ided free andare an important component of health care for the urban poor. The long waitsand low quality of care effectively rations these services to those who cannotafford private health care. I suspect that the term 'preventive medicine' is

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used as shorthand for two quite different things. The first is the expansionof essentially curative, basic health services into the rural areas. 1/ Thesecond is the linkages between health programs and other sectors; watersupply, nutrition, education and shelter.

The expansion of health facilities in the small towns and ruralareas of the MENA countries is proceeding at a rapid pace, though they tendto be inadequately staffed for the reasons mentioned earlier. A particularproblem concerns suitably staffed facilities for women and small children,and it would seem to be a matter of high priority to try to train more womendoctors. Aside from that however, the attention should be given to trying totarget health programs directly to the poor. 2/ In the process there is agood chance that the rest of the population will have its needs taken care of.This may not be the case however, if the objective is simply to expand inorderly fashion the coverage of the present health services. As pointed outbefore, however, the expansion of health services will not be enough to ensurethe necessary improvements in health status. That will require correlatedimprovements in income, education, nutrition and shelter. The countries ofthe MENA region are only beginning to take this broader view of the conditionsfor improved health and life expectancy.

E. Education and Poverty

The countries of the MENA region clearly lag behind the comparableEast Asian and Latin American countries in the educational status of theirpopulations. Adult literacy in 1976 was only 54 percent in the MENA countriesas compared to 69 percent for all middle income developing countries. A closerlook at the figures makes the source of this lag quite clear. Whereas foreducation of males at the primary level, the MENA countries have a higherratio of enrollment than other middle income ldcs (99 percent as against 94percent), there is a radical difference in the educational position of girls.Only 67 percent of the relevant age group is currently enrolled in primaryeducation as against 86 percent for all middle income ldcs. When it isremembered that these figures almost always include a large number of overagestudents and repeaters, it would probably not be far off the mark to say thatonly about half of the girls in the primary age group in the MENA countries goto school.

1/ The relative underutilization of many 'of these rural health facilitiesis a topic which merits further study in the region.

2/ This is easier said than done. It is clear in extreme cases, for example,facilities for relatively sophisticated surgical procedures may have lowpriority for most countries in the region. There are' a wide range ofother activities, however, where the specifics of targetting healthprograms to the poor are unclear. This seems to be another area whichmight benefit from closer analysis.

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If these figures could be broken down further they would almostcertainly reveal a startling dichotomy between the city and the countryside.Educational facilities in general are much more limited in the rural areasthan in the cities and towns. (Primary education in Algeria is a notableexception.) In some countries this is simply a budgetary problem. Even withvery rapid expansion, the coverage has not yet reached more remote rural areaswhere costs per student may be quite high. Since primary schooling in many ofthe countries in the region separates boys and girls this may be an additionalproblem since in many areas population may be too spread out to justify aclassroom unless adequate transport facilities exist. This is a particularlydifficult problem in Morocco and Tunisia where the rural population lives onits farm holdings, and is not clustered in small villages as is the case inTurkey, Iran and Afghanistan for example. The problem of securing suitablefemale teachers for remote rural areas is a particularly difficult one formany of the countries where female education is largely urban.

But the problem is not only on the side of the supply of facilities.In some cases the demand is also a factor. There are opportunity costs ofsending children to school. In parts of Morocco for example, girls from theage of 5 to 12 are of great importance to household income through theirinvolvement in carpet-weaving. The role of boys in sheep and cattle herdingis also significant. Although the perception is gaining that the benefits ofeducation in the long run, particularly for boys, outweigh the costs, the verypoorest families may still experience great difficulty in being able to dowithout the income from children. In such cases it is common for some of thechildren in the family to attend school and others not. In Southern Tunisiawhere many classrooms stand empty it seems clear that while parents maintain apositive attitude to education they are reluctant to undertake costs whichseem high in relation to the benefits. Unemployment of school leavers inTunisia is very high. Low rates of enrolment in Southern Tunisia seemtherefore to have a substantial demand element in them. 1/

It would be hard to argue however, that the low rates of femaleenrolment in the MENA region reflect the particularly high financial oppor-tunity cost to the family of sending girls to school in these countries rela-tive to other parts of the world. Clearly socio-cultural traditions are amajor factor in this regard. The early age of marriage and child-bearing is afactor. Limited opportunities for women to benefit from their educationthrough employment is still a very important consideration. And finally anunwillingness for girls and women to participate in the social situationsinvolved in attending a school which is a considerable distance from the home.While these factors are very significant, the speed with which they are chang-ing is perhaps even more impressive. In 1960, primary enrolment of girlsin the region was only 39 percent, as against 74 percent for all middle-incomeldcs. In 1976 the gap had narrowed to 67 percent in the MENA countries to 86percent in all middle-income ldcs. If the MENA countries can keep up the same

1/ This is not to say that the appropriate policy response might not be toincrease the supply of facilities and thus bring down the cost to a pointwhere it is lower than what are perceived as rather limited private bene-fits.

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rate of progress in the eighties and the other middle-income ldcs continue attheir earlier pace then the gap between the two will be closed before the endof the decade.

It is somewhat more difficult to generalize about higher education.Some MENA countries have very high rates of secondary and higher enrolment,others very low. No pattern is discernable. Egypt, Jordan, Syria, Iran, Libyaand Kuwait have more than 40 percent secondary enrolment - the average for allmiddle income ldcs is 36 percent. On the other hand Afghanistan, PDRY, YAR,Morocco, Tunisia and Algeria had about 20 percent or less in 1977. Once againthe relevant comparator may be the increase since 1960. In that year onlyJordan and Kuwait had more than 20 percent of the relevant age group insecondary education. Admittedly the rate of increase has been very rapid inother comparable ldcs as well. Egypt is a particularly striking case withregard to the percentages of enrolment for a country at its income level. Theratios of primary to secondary to higher enrolment in Egypt are 10:6:2, ascompared to all middle income ldcs ratio of 10:4:1. This is a very question-able composition for a country with only 72 percent primary enrolment overall,given the costs of higher education and the fact that it is geared to middleand upper income groups.

There is some basis for arguing that higher education as it is beingcarried out today in the countries of the MENA region, and in other ldc's forthat matter, is regressive in its impact on income distribution and is re-inforcing inequalities rather than redressing them. 1/ The first aspect ofthis is who attends secondary schools. The 20 to 50 percent of the age groupwhich typically goes to high school in the MENA countries is heavily urban,middle class and male. The probability of attending secondary school is onewould imagine, 100 percent for an urban male in the top 50 percent of theincome category, and zero for a rural female in the bottom 50 percent of theincome earning households. Yet not only do governments invest the large andincreasing amounts needed to provide facilities and teaching staff, which isunderstandable, given overall developmental needs for trained and skilledpersonnel, but they also subsidize students directly in many countries forsecondary and post-secondary attendance. The stipend for university studentshas become an almost universal feature of the countries of the MENA region.Free board and lodging is .given to students, pocket money for other expenses,and then at the end of their studies the government guarantees employment tograduates. In some countries there is an effort to limit these to genuinescholarship cases, but for the most part the stipend has become a generalsubsidy, eating up substantial budgetary resources. 2/ The argument that it

1/ This does not apply to some countries in the region (Algeria, Iraq,Libya and PDRY) where income differentials are smaller and education hasbeen in the forefront of modernization programs.

2/ I cannot resist quoting the comment of one economist that: "The govern-ment provides rich students with pocket money to go and chase the girlsand put gasoline in the sports car."

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is difficult to apply a means test for subsidies in developing countries isover-stressed - perhaps by government officials who might be ruled out fromreceiving subsidies by the application of such a test. It should be possibleto develop a set of easily enforceable criteria 'hich would entail no morebureaucratic procedures than the present system.

In *st of the countries of the region, the commitment to educationis very apparent. Perhaps the most remarkable example is the literacy campaignon which Iraq has recently embarked. Classes are given for adults and it isa criminal offence punishable by a $30 fine for an illiterate to refuse toattend these (needless to say there is a fine of $90 and a one month jailsentence for anyone who claims he can read but is then found to be illiterate).Large proportions of the budget in countries such as Tunisia, Morocco andEgypt are already being channelled into the education sector and it is dificultto see that still more resources could reasonably be channelled into thesector. What is needed is a shift in priorities in the near term away fromuniversity education for the middle classes (often liberal arts programs withlittle obvious impact on the society as a whole 1/), and greater emphasis onextending primary education and with it basic literacy and numeracy to thepopulation as a whole. Once this has been done of course secondarv and highereducation will have to be expanded to meet the greater demand for places.This will then require re-thinking curricula at secondary schools to orientthem towards vocational objectives rather than simply university entry, andre-shaping university programs to respond more closely to future developmentalneeds.

The need for more vocational and skill training is another of theaxioms which recur in almost every Bank report on the MENA region. Advice onthis subject needs to be a good deal more discriminating than it has been inthe past, in identifying the country situations which are relevant. Anotherkey factor is the kind of training to be given. Tunisia has two vocationaltraining programs. One, run by the Ministry of Education, has not been effec-tive, and only 50 percent of the graduates have been able to find employmentwithin a year of graduation. A second, run by the Ministry of Labor is care-fully related to the projected needs of private and public industry, and inthis case 92 percent of graduates have been placed within a year.

Education, which should be one of the most powerful instruments forthe poor of the MENA countries to improve their incomes and the quality oftheir lives, is not adequately serving this function at present. In manycountries it is simply re-inforcing traditional socio-economic structures,and producing unemployable graduates. Where governments have adequate resour-ces, most notably in the oil-producing countries, there is a tremendousexpansion of educational facilities. Where resources are contrained however,the choice is too often being made on the side of pouring funds into intensiveprograms focussed on the urban middle-classes and not enough or extensiveprograms to achieve proper coverage of the rural poor.

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F. The Urban/Rural Contrast

The contrast between urban and rural living standards has emerged asa constant theme in the preceding sections. There are a number of reasonswhy this should be so. They do not differ I suspect from the pattern in otherregions. On the income side the problems relate to low levels of agriculturalproductivity, unequal distribution of land holdings and fragmented labormarkets in rural areas. In urban areas on the other hand there are usuallyhigh rates of modern sector investment being undertaken in most cases by thegovernment in state run enterprises or utilities, and the labor market operatessomewhat more efficiently, at least for the private sector. As mentionedearlier, higher urban incomes are not always offset by higher urban livingcosts. In Tunisia average incomes are 160 percent of the national average inthe big cities and 72 percent of the national average in the rural areas, andfood subsidies still chiefly benefit those in the urban areas. But thecontrast between rural and urban areas is even more striking with respect tothe availability of social services. Why is this the case? Perhaps the mostimportant factor is the sheer logic of expanding a program from a small base.When the question arises of rural water supply in Afghanistan for example, itis rightly pointed out that the responsible institution hardly has the capacityto reach more than a very small proportion of the better off residents of thecapital city, let alone expand its activities to encompass the rural areas.Even where a separate institution was created to deal with rural water supplyits capacity to contruct and maintain systems limited it to a tiny number ofvillages in the initial years of the program. The example could be generalizedto most spheres of development activity and certainly to most of the socialprograms.

But even where there is a competent central organization which couldorganise the expansion of social programs, there may be constraints of resourcesand staffing. Many, though not all, social services are more expensive todistribute in the rural areas where population is spread out, and rates ofcapacity utilization may be low. Governments which reach 70 or 80 percent ofthe population in fields such as primary education, including a good proportionof the rural population, are often put off by the costs of reaching the last20 and 30 percent who may be spread over large areas with low-density settle-ments. The expansion of primary education in Southern Tunisia is an excellentexample of this. Getting suitably trained school teachers to go out to smallrural communities, particularly women teachers, or for that matter trainedpersonnel in any area of the social services, is often very difficult. Thisis not merely a matter of a preference for being near the city or near theirfamily. Often the move to rural areas may involve economic hardship such asthe loss of a second job or supplementary income from private practice or extralessons. Few governments in the region provide adequate financial incentivesto personnel to re-locate in rural areas.

The reasons for rural neglect go beyond these factors however, tothe relative weakness of the lobbies for rural social expenditures. On theone hand this is by default. The urban lobbies are much more powerful polit-ically with the opportunity to make their presence felt directly. Where

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governments are forced into explicit choices between say food subsidies whichare substantially geared to assisting the urban working class, particularlythe middle and lower ranks of the civil service, and direct investment expendi-tures on rural development, the experience in say Turkey and Egypt is that itis the former which wins out. The civil service itself is a powerful lobbyagainst the kind of development which might require a devolution of authorityfrom the center to the regions and might even necessitate their own re-locationin the rural areas. It would not be very difficult for a government torequire that service in rural areas is a requirement for entry into or promo-tion or whatever at some stage of a civil service career, yet very few coun-tries in the region have such a requirement and then only in specific fields.

The consequence of this is urban growth rates of four to five percentper annum in most countries of the region, and a disproportion between ruraland urban indicators that is quite striking. If it were possible to show eachof the main social indicators according to this breakdown, the urban figure inmost categories would be about double the rural figure in primary enrolment andfar higher in secondary enrolment and ratios of health facilities and personnelto population. One should probably sub-divide the categories into the majorcities and other urban areas, because even between these groups there would besignificant differences. Similarly the rural areas often divide up betweenthose which are substantially modernized with a good deal of exchange withrelatively accessible nearby cities and towns, and others which are moreremote and essentially subsistence in character. The Mediterranean areasof many of the countries of the region contrast quite strikingly with theinterior areas.

It would be unfair not to allow for the possibility that it may makeperfect sense, given the difficulties of administration and finance, forgovernments to neglect the expansion of social services in the rural areas andimplicitly encourage urban migration and increasing concentration of the popu-lation. The slums of Cairo, the bidonvilles of Morocco and the extreme over-crowding in Algerian cities, suggest however, that a pace of urbanizationwhich is greater than the administration can deal with may not be to thecountries' best advantage, nor even minimize the costs of providing socialservices in the longer run. The marginal cost of providing adequate housingwithin a very short period, may for example, be much higher in the urbanthan in the rural areas. 1/ It would seem that a re-direction of governmentexpenditures to rural areas, combined with greater devolution of administra-tion and financial authority to the local level would offer a better balancethan at present. There is at least one example of this in the region which iswell on the way to being a success story. The YAR has used a limited amount

1/ This must be qualified however. Although the housing stock in the rural,areas is more adequate than in urban areas given differential populationgrowth rates, rural housing remains a major problem in the povertycomplex in the MENA region. Compared to any other less developed region,the need is far greater in the MENA countries for a structure which keepsout winter _cond. This is another area in which real costs in the ruralareas may not be as different from the urban areas as is usually assumed.The rural housing problem in these countries has been much too littlestudied relative to its importance.

of central government resources as the seed for subtantial development activi-ties through largely independent Local Development Associations. While theseare still at an early stage, the achievements in a short period have beennotable and suggest that other countries in the region would do well toconsider similar experiments of this kind.

G. The Male/Female Contrast

The contrast between the standards of education and health of menand women in the countries of the MENA region is apparent in the discussionin the preceding sections. It is not clear to what extent such differencesreflect the social and cultural traditions of the countries of the regionand to what extent they are simply the same aspects of underdevelopment whichcharacterize other countries of similar income levels. The evidence that wasdrawn from the sections on education and health suggests that the problem issomewhat more serious than in countries at similar income levels in otherregions, and this may indeed reflect the role which women play in thosesocieties which interpret Islamic traditions in a very conservative fashion.

In many of the MENA countries however, the change which is taking place,in the perception of women's role, is very striking indeed. The emphasis beingplaced in very recent years on education of girls in societies such as SaudiArabia, Iraq and Algeria, provides evidence of a new recognition, not just ofthe potential economic role which women can play in these societies, but theinter-relation between women's education and standards of nutrition andhealth. It isn't possible to establish a neat causal relationship betweenthese other aspects of development and women's education, but there is littlereason to doubt such a relationship. The most striking examples of women'sadvancement have been' in Tunisia, Turkey and Egypt where among the urbanmiddle-classes a degree of equality has been attained which is impressive byany standards. The short distance to the rural areas even in these countries,however, will reveal the substantial distance which still has to be travelled.

There have been d'isturbing reversals of this trend-recently, incountries in which political change seems to have become identified with arejection of what are perceived as modern or western values. The position ofwomen has become a rallying point for those who seek a return to traditionalways. It is valid to ask whether such a reaction might not be the precursorof similar movements in other countries, whether associated with fundamentalpolitical changes or not. This is an important question which a study of thiskind can only pay very casual attention to. It would seem politic to givethought to the kind of development which poses the least threat in theshort-term to traditional values, through for example the development ofseparate facilities in health and education and even in areas related to theeconomy. It may involve some costly duplication in the short run, but itmight better insure the success of the objectives of upgrading the health andeducation standards of the whole population in the long run.

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It is apparent that the position of women is a poverty issue andnot only a social one. There are few girls schools in rural areas. The richcan afford to send their daughters to board with relatives in the cities, butnot the poor. The contrast between the better off and the rest of the popula-tion is never as sharp as with respect to women's education in the ruralareas. It is in large measure a question of getting suitable women teachersand for that matter nurses and doctors to the rural areas, and in this regardthe discussions earlier about providing appropriate incentives are a relevantconsideration. One additional point concerns the problems which often facedivorced women in these societies. This is perhaps more serious in MENA thanother regions given the relative ease and frequency of divorce, and thehelplessness of these uneducated and untrained women from poor families whichcan provide little support to them.

H. The Impact of Migration

Migration across national borders has become an increasingly signifi-cant variable in the socio-economic future of the MENA countries. The totalnumber of migrants who live and work voluntarily in countries other thantheir country of origin is probably of the order of 6 million people. Whilethis is only equal to about 3 percent of the region's population, when itis remembered that these are mainly single men who often support large familiesat home, the impact of migration can be seen to be much more significant. Itis probably fair to say that about one in every ten people in the MENA coun-tries now obtains a portion of their total income from earners who work inother countries. Taking total migrants of 6 million and assuming that eachsends back only $1,000 a year, already brings the total income from remittancesto $6 billion or $30 for every MENA resident. In fact, average remittancesare probably considerably larger than this figure. In Morocco they average$4000 per migrant per year, and in Turkey about $2000. Even $30 per capita incountries such as Afghanistan, Egypt, YAR and PDRY is a useful addition to theavailable income, however.

Initially the migrants were not the poorest members of the community.They usually came from families with a little land, so that the harvest couldprovide the capital for the first trip abroad. The landless were not able tomigrate because their savings were inadequate to pay the initial expenses andto support the family during the waiting period before the first transfer ofincome. They were usually from families in which one or more of the sons wasunderemployed on the family holding. Of course there was migration from theurban areas as well, fueled by the open unemployment in many of the urbanareas. By now however, migration comes from almost every section of thesociety. The evident high returns have made it possible for even some of thepoorer families to borrow to pay for a son to travel to Saudi Arabia or Libya,or for that matter France and Germany, though there is no longer net migrationto Northern Europe.

55. It would be nice to be able to answer questions such as whetherthere has been a substantial brain drain from certain countries and whether

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income from remittances is sufficient to reimburse the country for the invest-ment in educating professionals and skilled workers. The benefits from themigration of unskilled workers are less ambiguous. Most of the sendingcountries have unemployment or underemployment at home and the workers abroadmay pick up basic skills which are useful to the country on their return. Andby and large the workers in other Arab countries do return. Th4s is lessclear in the case of the Turkish migration to Germany and the North Africanmigration to France, where those who return, do 8o mainly for retirement.

What happens to the money the migrants send back? Is it channelledinto investment, or does it go into consumption of durables or for that mattersimply the family's subsistence? Once again the facts are slim. There aremicro studies on the impact of migrant earnings on rural communities in Turkeyand Tunisia. The one case where special efforts have been made to try tochannel migrant earnings into investment, particularly in agriculture, is inTurkey where there are schemes based on the co-operatives and private groups.For the rest, migrant earnings seem to go mainly into constructing a house orpurchasing land or a car. In Algeria so much of the remittances went intolarge cars and taxis that the government has now put a stop to it. In Turkeythere were also imports of cars and tractors - the latter contributing to theover-mechanization of agriculture. It is a common sight in many of thecountries of the region to see houses in various stages of completion waitingfor the next transfer to come from the father, brother or son abroad, beforethe work is re-commenced. The example of the YAR local development associa-tions, quoted earlier, is good evidence of what can be done if attempts aremade to channel the considerable funds flowing into the rural areas in theMENA countries into development projects which have a base of popular support.Another good example is the successful efforts of the Credits Populaires inNorth Africa to attract immigrants savings and re-lend them for small-scaleprojects.

I. Eliminating Poverty in the Region

For most of the countries in the region the goal should not bereducing poverty, but eliminating it. It is convenient to discuss this interms of the growth of income and population on the one hand and the distribu-tion of income on the other. The starting point is growth in total income.Can the 7 percent per annum which has been achieved so far in the 70s, bemaintained during the rest of the century. This is of course in large part aguess about the future trend in oil revenues. It seems unlikely that the realgrowth can be maintained over such a long period. In addition, some resis-tance is likely to develop to increasing numbers of migrant workers in therecipient countries. However, other forms of spillover may become signif-icant. The investment by oil producing countries in other MENA countries hasbeen a trickle so far. In addition the flow of exports from other MENA coun-tries into the oil producing states in the form of agricultural commoditiesand manufactured consumer goods, is also likely to accelerate.

The political volatility of the MENA region and the uncertaintiesabout oil prices make any attempt to project income trends extremely hazardous.

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A first group of countries in which growth prospects appear good, include theoil producing countries which have been politically stable over the pastdecade: Algeria, Iraq, Saudi Arabia, Kuwait and Libya. The outlook is alsopromising in those countries which are well placed to benefit from remittancesand agricultural exports, particularly Jordan, Syria and YAR. Finally Tunisia,with its proven record of good economic management, should continue to grow ata rapid pace. The picture is more mixed in the remaining MENA countries,where political instability and/or the need to come to grips with economicand administrative constraints may limit growth in the period. The last groupincludes some of the most populous countries in the region; and four of thefive poorest countries as well. It is reasonable to expect growth in thefirst group of countries mentioned above of the order of 5 to 8 percentper annum, while for the countries in the second group a range of 3 to 6percent per annum might be more realistic.

Population has grown at 2.6 percent per annum between 1960 and 1977in the MENA region. What will be the growth rate through the remainder ofthis century? The factors which will determine population growth are first ofall the rate of growth and distribution of income, second the spread of healthand education facilities and third the commitment of MENA governments to popu-lation planning. It is surprising how important this last factor seems tohave been in determining different country achievements in the past. If themix of factors is no different from the past then only a small decline can beprojected in the rate of population growth. That there will be any decline atall is largely attributable to the fact that the major improvement in deathrates has already taken place so that future declines in birth rates will notbe offset by more than proportionate lowering of death rates. In three coun-tries, Afghanistan, YAR and PDRY, this is not the case, however, and the pros-pects are for a higher rate of population growth. In other countries in theregion declines can be expected. In most cases the year 2000 should see birthrates down to 30, except for Turkey and Tunisia where they should be lowerstill. A best guess would be a population growth rate of 2.0 percent in theyear 2000 and an average of 2.3 percent per annum in the intervening period.I shall leave aside for the moment the question of whether this should be anacceptable scenario to the governments of the region.

Growth in per capita income in the MENA region from the present tothe year 2000, may average something of the order of 2.2 percent per annum.This rather low figure is in large part a consequence of the heavy weightingof large countries in which growth is projected below the average. Thisassumes much the same mix of economic policies as in the past, and the limitedpopulation planning efforts cited in the preceding paragraph. The consequenceof this would be average income in the region 70 percent above the 1977 levelby the year 2000 i.e. $2264 per capita, but under $1700 if the three highincome oil producing countries are excluded (Saudi Arabia, Kuwait and Libya). 1/In para. 2, I classified the countries in the region into low income (below$600), middle-income ($600-$1200) and high income (above $1200). Threeof the five countries in the low income groups would still fall into that

1/ All figures in this and succeeding paragraphs are in 1977 dollars unlessotherwise indicated.

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category in the year 2000 (Afghanistan, Egypt, and PDRY). The other two lowincome countries would move into the middle income group (Morocco and YAR).All six countries which are currently in the middle income group would movewell beyond it into an income category between $1500 to $2000 (Jordan, Tunisia,Syria, Algeria, Turkey and Lebanon). This widening disparity on a regionalbasis reflects the assumption cited above that policies and population effortsare not changed. In practice one wonders whether there would not be profoundpolitical changes in the lagging economies in the face of continuing slowgrowth. In addition large labor forces at relatively low wages in countrieslike Egypt and Morocco might well make them an attractive focus for capitalinvestment from the oil surplus countries.

The high income countries in the region will have the resources toeliminate poverty. Whether this will indeed be achieved will depend on thedistribution of income in those countries. A useful proxy for this can be gotby using the data on income distribution in Turkey and Tunisia which are amongthe more reliable for any countries in the region. In 1973 the bottom 20 per-cent in Turkey had an income which was on average 17 percent of the nationalper capita income. In 1977 this would have been equivalent to $190 per capitaas compared to the national average of $1110. In that same year the povertycut-off was $230 in the rural areas and about $400 in the urban areas. In theyear 2000 we can estimate income levels in Turkey at about $1800 per capita.With no change in income distribution the bottom 20 percent will receive onaverage $306 per capita in the year 2000. Even with no change in the reallevel of the poverty cut-off, a reasonable assumption about distribution ofincome within the bottom quintile suggests that there will still be a substan-tial number of absolute poor in Turkey in that year. Tunisia should have thesame real income per capita as Turkey by the year 2000 (i.e. $1800), but withthe bottom quintile receiving 25 percent of the national income per capita onaverage, their income level would be $450 which could reasonably be expected toresult in the virtual elimination of poverty. The significance of rather smallshifts in the share of the bottom quintile is important. It suggests that ifthe richer countries were able to target even two or three percent of their GNPin programs which would directly assist the very poorest groups, the problemsof the poor, at least in the high income MENA countries, would be well on theway to solution. The poverty problem is far less sensitive to even majoracceleration in the rate of growth of income. For the bottom quintile inTurkey to achieve the same income level in the year 2000 as the bottom quintilein Tunisia, income in Turkey would need to reach $2650 instead of the $1800which is projected above, in the absence of changes in income distribution.

This assumption of no change in income distribution can be testedwith the help of Tunisian consumption surveys undertaken in 1966 and 1975.During this period, the share of the bottom quintile in total income fell from7 percent to 5 percent. In other words, while per capita income rose duringthe period by 60 percent on average, from $510 to $820, the income of thebottom quintile rose by only 14 percent on average, from $180 to $205. Thedata suggests that the participation of the very poorest group in the growthof one of the world's most rapidly expanding economies, was disappointing.The Tunisian data raises a number of interesting questions. Why, for examplewas the second lowest quintile able to maintain its share of income? Is there

perhaps some rigidity in the labor market which prevents demand from reachingthe poorest group? If one went back before 1966 would one observe a redistri-bution towards the poor as a consequence of the social programs of the earlysixties, and could the levelling off of expenditures on these programs be afactor in the worsening relative position of the lowest 20 percent?

The generalization I would draw from the foregoing is that withoutredistributive programs targetted at the bottom 20 percent the mixed economieswhich will fall into the category of high income MENA will still have substan-tial pockets of poverty remaining in the year 2000 (Turkey, Tunisia and Iran).This may also apply to those countries with major exogenous income sourceswhich go directly to the state. In their cases, however, the constraint willrelate to the effectiveness of the redistributive program which they arepursuing, i.e. their capacity to design and implement such programs (Algeriaand Iraq).

The more serious problem for the region is the countries which willstill fall into the categories of low and middle income MENA by the year 2000.These five countries (Afghanistan, Egypt, PDRY, Morocco and YAR) have 36 per-cent of the region's population (77 millions), but 50 percent of its poor (24millions). The first four of the countries in this group are also expected tobe among the slowest growing in the region, so that overall there is littleconfidence that the numbers of the poor will decline in absolute terms.

What can these countries do about poverty during the next twodecades? It is perhaps inevitable that the countries where the povertyproblems are severest are also those which are worst placed in terms offinancial and administrative capacity to tackle them. Expenditures onbasic needs activities in these countries are already a high proportion oftotal public expenditures (about 50 percent in Egypt for example). Can wein good conscience suggest further increases? In Egypt and Afghanistan anumber of observers have suggested that the government should indeed adoptstrategies which are specifically basic needs oriented. Although in boththese countries the proposals are couched in terms of shifting publicexpenditures out of costly indiscriminate subsidies and programs in health andeducation which emphasize quality and have little benefit for the poor, thereis still a large additional amount which must be funded. In Egypt, it wasestimated that the total amount required annually to provide full satisfactionof basic needs, was nearly three times the level of gross domestic investment.

That comparison makes the trade-off between growth and acceleratingthe time schedule for poverty elimination all too apparent. Is it reasonableto ask the very poorest countries in the region to slow their growth rate inorder to achieve the income distribution implied by a basic needs strategy?Even if it could be argued that additional resources would be made availablefrom external sources to do this, is it reasonable even to ask that thoseadditional resources be used for basic needs and not for more investment. Upto a point it probably is. The lack of basic literacy and numeracy, andsimple mechanical skills is a major development constraint in many of thecountries of the region, and certainly in Afghanistan and Morocco. The samecan be said about preventive medicine and the availability of basic health

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care. In many countries in the region the limits to such programs are set bythe lack of capacity to plan, staff and administer them, rather than justfinancial resources. The Tunisian experience suggests that the active pursuitof basic needs can promote development rather than delay it.

There are no hard and fast rules for the poorest countries. It isa matter of balancing a program of carefully selected high return investmentprojects on the one hand with the expansion of basic needs through low costprograms at a rate consistent with the capacity to staff and administer suchprograms. In practice it is perhaps easier than it sounds to indicate atleast the direction in which a better balance might be achieved. The regimein Afghanistan prior to 1977 with its strong etatist biases attempted to steerdonors in the direction of establishing heavy industry with demonstrably lowor negative returns. At the same time, despite a literacy rate of 10 percentand infant mortality of 269 per thousand births, there was little effort atbreaking the administrative bottlenecks to expanding health and educationprograms. It required no great analytical expertise to see that the wrongbalance had been struck in that situation. On the other hand in Egypt theBank has argued that subsidies and costly programs which do not reach thepoor should be more carefully targetted so as to benefit them and that thesavings from doing this would then be available either for expanded coverageof the basic needs of the poor or to expand productive investment. This ofcourse still begs the question of the choice between the two alternatives, butthe decision can be a pragmatic one which examines the relative costs andreturns of individual programs and projects.

Poverty elimination is a matter of either raising the incomes of thepoor through growth or through increasing their share in total income. Care-fully targetted basic needs programs can be a major means of achieving boththese objectives. There are however many other approaches which ought tocomplement such programs and it would take a separate study to cover themadequately, but for the sake of completeness let me deal with them briefly.There is the potential for redistribution of assets through nationalization ofprivate industry and trade and particularly through land reform. Nationalizingprivate business would have no direct impact on the poor; in principle profitswhich earlier accrued to private industrialists could be channelled intosocial programs, but in practice the experience has been that public enterprisesbecome a drain on the budget rather than a source of additional funds. It isnot clear to what extent land reform programs in the very poorest countries(e.g. Afghanistan, Egypt and Morocco) would actually help the poorest and towhat extent they would mainly affect the relative shares of the higher quintiles.The lowest quintile which comprises mainly the landless agricultural workersmight not be much helped by such programs, depending on their design. Thiscarries no implication on the desirability or otherwise of the land reformprogram but cautions that its impact on poverty may be less than is sometimesthought. The most important impact of asset redistribution on poverty may bethrough changing the political power structure within the country. In additionto direct re-distributive measures, governments can choose investments orintroduce polices which have a disproportionate impact on the poor. Pilotrural development programs have appeared to be very effective in the MENA

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region in this regard but questions of their replicability in terms of re-sources and management remain. Policies to promote small industry and toinsure that labor markets function efficiently can also have high returns interms of their poverty impact.

Are the MENA government committed to poverty alleviation? I wouldanswer a qualified yes. There has always been a strong streak of mutualresponsibility in the social fabric of the MENA countries, which comes atleast in part from their traditions. The rich have responsibilities towardsthe poor. Nor are there social barriers between income groups of the kindthat prevail in other parts of the world. The richest man in the villagewould think nothing of squatting next to his poorest neighbor at the nearby'chaikhana' in Afghanistan or Turkey and discussing matters of common interest.In the rather arid countries of the region, irrigation systems also impose amutual interdependence. The performance of governments of quite differentstripe in Algeria, Tunisia, Iraq and YAR provides ample evidence of commitmentto poverty elimination. The yes is qualified however, because of the politicalvolatility of the region. At times of political uncertainty and duringrecurrent periods of national rivalries, the interests of the poor seemto get lost in the shuffle. Resources which might be directed towards thestruggle against poverty have been funnelled into military hardware and largestanding armies as in Iran prior to 1979, 1/ or have been used to benefitdisproportionately politically powerful groups such as the civil servants andmodern sector workers in certain countries in the region. The fate of thepoor in the MENA countries may lie as much if not more in the settlement ofthe region's political conflicts than in the mechanisms of economic policy.

J. Some Conclusions and Questions

What will the region look like in the year 2000? The average incomeof the countries other than Saudi Arabia, Libya and Kuwait would be around$1700. The social indicators would still lag somewhat relative to income.Life expectancy would probably have risen to about 62 or 63. Literacy levelsshould have moved up to about 60 percent of the population in the region(perhaps 80 percent of males and 40 percent of females). Infant mortality

1/ The impact of high levels of mobilization on income distribution is quitecomplex however. In a static sense the relatively poor almost certainlygain since most servicemen would be drawn from lower income groups whiletaxes would be paid mainly by upper income groups. However the poor areprobably worse off in the long run since services and investments whichaffect them directly are often residually determined and this residualwill be smaller if there is a large military budget to be financed. Thiswill only be true however if it is assumed that the tax effort would bemaintained in the context of a reduction in military expenditure - aquestionable assumption. This topic seems to raise a set of questionswhich might repay further examination.

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should have come down from over 100 per 1000 births to around 70. The propor-tion of the population which is urban will have moved up from about 45 percentat present to about 60 percent and open unemployment and problems relating tourban congestion are likely to be among the most serious which policy-makerswill face.

When one deals with the very long term it is often difficult to seethe relevance of factors like efficiency or alternative growth strategies.The inexorable effect of compounding positive trends seems to reduce all poli-cies to seeming insignificance. For example if Egypt were to be able to halveits population growth rate immediately it would achieve its growth target forthe year 2000 by the year 1995. When you reduce such an enormous change toa matter of a few years of growth it becomes harder to motivate administratorsto make the kinds of effort which are implied. Similarly with the indicatorsfor human resource development. A figure of say 30 to 35 million poor in theyear 2000 for example is only 8 to 10 percent of the region's population inthat year and it is tempting to project a few years beyond that and demons-trate that by the year 2020 absolute poverty in the region is close to beingentirely eliminated.

We are not in the business of taking the long historical view,however. Each point on the growth rate may be only five years of differencebut that is too long a stretch in the life of an individual for us to write itoff. Choosing wisely from among the policies which offer the greatest good tothe greatest number within a time-frame which recognizes the rights of thepresent without mortgaging those of the future - this should be active pursuitof the governments of the MENA region. It may be true that in time everyonewill get their share of the benefits of growth, but if 'in time' covers aperiod when large-scale poverty persists, huge numbers remain uneducated,and one in ten infants die before their first birthday, then it is not enough.We have suggested in the course of these pages that there are things thegovernments'of the MENA region could do, which they are not now doing, toimprove the situation of the poor and develop human resources more rapidly.

I can only delineate in general terms the areas which this briefstudy has suggested would repay further analysis and review. These include:

a. An assessment of the costs of rapid population growth, not onlyat the macro level, but also in terms of the quality of life ofthe family. An examination of the relative success of Tunisia inreducing population, and the continued high population growth, evenwith substantial income growth, in Algeria and Syria. Will higherincomes and increased education and employment of women in theMENA region be sufficient in themselves to bring down the veryhigh crude.birth rates which persist overall?

b. A study of the impact of food subsidies on the poor. Is subsidizedfood reaching the rural areas? Is this an efficient form of incomeredistribution? Is it possible to develop alternative approacheswhich limit the number of commodities, or are targetted to specificsub-groups of the population? Would alternate packages of invest-ment, geared more narrowly to urban or rural poverty groups, be moreeffective?

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c. Food supplies in the region are adequate, yet chronic malnutritionpersists in many areas. The linkages between nutrition and popula-tion growth, health, education and income distribution need a greatdeal more analysis to identify appropriate policies in this area.

d. Relsted to this is the question of school-feeding schemes. Thishas only been introduced to a limited extent in the MENA region andthen only in the more accessible, usually urban areas. Would suchschemes be more effective in targetting food supplies to vulnerablegroups? Are there low-cost schemes and fairly simple approaches toprevent corruption which could be replicated in the MENA region?How successful has the Algerian school lunch program been in theserespects?

e. A study on the factors which lead to continuing high rates of infantmortality in the MENA region. What are the components of programswhich could lead to an improvement? Could such components beintroduced on an efficient low-cost basis?

f. A comparative examination of the countries of the MENA region tosee where increased coverage of the population by health personneland facilities has been achieved with relatively low cost. A studyof programs to expand the training of women doctors and nurses.Can incentives be provided to encourage doctors to practice inrural areas and can the enormous problem of enabling women doctorsand nurses to practice in such areas be solved?

g. A study of the education of girls in the MENA region. How can thebottleneck of educating girls in the rural areas be broken? Hasit been done successfully in individual cases and what is the basisfor that success?

h. The budgetary implications of full coverage. Can the average costper student be brought down? Can higher education be made morecost-effective and can the stipends now given largely indiscrim-inately to college students, be targetted to those who really needthem?

i. An examination of the special problem of providing education andother social services in areas of low-density settlement. Are thereapproaches through boarding, or transportation of either pupils orteachers which could be cost-effective in dealing with these diffi-cult but important fringes of population? The education of nomadsshould also be considered in this category.

j. Are curricula in the MENA region at the secondary and higher levelsadequately geared to the needs of developing countries? Can andshould the automatic link between higher education and governmentemployment be broken?

k. Is there scope to do more in the way of non-formal education ofadults? The experiment in Iraq and also the program which isunderway in Afghanistan should be monitored closely to assess theirimpact.

1. How can rural neglect be redressed? What is the experience withdevolution of administrative and financial authority to local units,in the MENA countries? Could compulsory rural service by civilservants contribute to this? The Local Development Associationin YAR are a particularly impressive example of what can be done.This should be monitored and an attempt made to assess the kinds offactors which have made it successful.

m. Are there traditional constraints to the development of women insome MENA countries which could be relieved through a careful programwhich builds on traditional values in the first instance rather thanissuing a direct challenge to them? Should some of these countriesconsider 'affirmative action' for women in areas such as educationand employment?

n. How can the resources, which migration is transferring to the ruralareas of many of the MENA countries, be channelled into activitieswhich will have a long term impact? What measures have been taken bycountries in the region so far?

O. Much more work is needed in the MENA countries on how rural labormarkets operate and how increased labor demand can be translatedinto effective income redistribution through wage rates and employ-ment levels.

74. I make no apologies for concluding with a set of questions ratherthan answers. I think they are important questions and in many cases havenot been asked at all or at least not asked loudly enough, which is whythere are so few answers around. Of the various less developed regions, theMENA countries are likely to face the least constraints in terms of resourcesin providing answers to these questions. It will be pity if they do not faceup to the questions and try to develop responses which could lead to improve-ments in living standards of all the people in the region - a goal which wouldseem to be in reach given the resources the countries in the region will haveat their disposal.

SOCIAL AND ECONOIOC INDICAMRS FOR THE KENA COUNIItIES

CNP Growth Total PriaryPet Capita in GNP Crude Birth Rate Crude Death Rate Fertility Life Population Enrollment

- $ Per Capita Population Rate Expectancy Urban per Secondary1977 1960-77 mid-1977 1960 1977 1960 1977 1977 1977 Proportion Physician Literacy Male Feal. Enrotlmnt

AFrItANISTAN 190 0.2 14.3 48 48 30 22 6.9 42 13 20,290 12 30 5 12

EGYPT 320 2.1 37.8 44 36 19 13 4.8 54 44 1,190 44 88 56 42

PDR. YDEME 340 -4.8 1.7 50 49 29 19 7.1 47 34 9,210 27 107 48 19

YDElN ARAB REPUBLIC 430 - 5.O 50 49 29 19 7.2 47 8 10,770 13 45 7 4

MIOROCCO 550 2.2 18.3 SO 45 21 13 6.5 55 37 11.100 28 82 47 17

JORDAN 710 1.8 2.9 47 47 20 13 7.0 56 53 2,250. 59 88 79 42

TBNISIA 860 4.3 5.9 47 32 19 12 4.6 57 48 4,800 55 118 81 20

SYRIA 910 2.3 7.8 47 46 18 13 7.0 57 47 2,510 53 121 85 SO w

ALGERIA 1,110 2.1 17.2 S 48 20 13 7.3 56 54 5,590 35 105 72 19

TItREY 1,110 4.1 41.9 43 30 16 10 4.3 61 43 1,720 60 114 94 29

LEBANON - - 2.9 43 32 14 8 4.7 65 70 - - - - -

IRAQ 1,550 3.8 11.8 49 4 20 13 7.0 55 66 2,530 - 125 72 38

IRAN 2,160 7.9 34.8 47 40 21 14 5.9 52 45 2,570 SO 119 77 48

SAUDI ARABIA 6,040 6.7 7.6 51 49 28 18 7.2 48 59 2,220 58 34 19

LUBTA 6,680 6.6 2.6 49 48 19 14 7.4 55 44 1,020 4S 163 147 6S

KIWAIT 12,270 -3.1 1.1 44 45 10 5 7.1 69 84 850 60 98 87 60

PART V

SOME ECONOMIC ASPECTS OFHUMAN DEVELOPMENT IN LATIN AMERICA(WITH SPECIAL EMPHASIS ON EDUCATION)

Prepared by: Guy P. Pfefferman, Latin America and the Caribbean,Office of the Regional Vice President

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Table of Contents

Page No.

Historical and Political Setting ............................. 177

The Present Situation ........................................ 179

The Future ............. ...................................... 182

Costs of Expanding Social Survices ........................... 186

Tables

Population, Rural Population, and Urban-to-Rural Ratio ....... 179Illiteracy Among Persons Aged 15 and Over .................... 182Changes in the Educational Composition of Employment

(No Deepening) ............................................. 183Changes in the Educational Composition of Employment

(With Deepening to Argentina's Levels) ..................... 184Enrollment Indexes ........................................... 184Urban and Rural Population and Enrollment .................... 185Enrollment Levels and Trends ................................. 188Costs of Increased Primary Coverage and Scope for

Private Financing .......................................... 190

Attachment Table 1. Recurrent Unit Cost per Primary SchoolPupil and Primary School Enrollment Ratio 191

Attachment Table 2. Education Expenditure as a Share ofCentral Government Flows .... ............ 192

Footnotes ............. ....................................... 193

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Historical and Political Setting

Latin America was colonized by the Spanish and the Portuguese whoimposed a centralized political and cultural system. Pre-Columbian culturessurvived only beyond the effective reach of European colonization, and werenot allowed to influence the formal system of education; the bulk of thenative populations of, Latin America were in effect left out until Independence(and often much later) of the formal system of human resources developmentand speak little or no Spanish. 'This is in contrast to some parts of thedeveloping world where a strong cultural heritage survived the introductionof Western civilization, and where there is considerable cultural homogeneity.There the provision of social services such as health and education has, aseverywhere, evolved originally to cater to the elites and have later spreadout to reach a larger part of the population.

In Spanish America this process has from the time of colonizationonward been profoundly marked by ethnic cleavages between the Indian populationson one hand and the colonists and their descendants on the other. The distinc-tion has been blurred with the passage of time, as persons of Indian, Spanish,Portuguese and other origins intermarried, but the ethnic cleavage remainsrelevant to this day where sizeable Indian communities exist. This concernsparticularly Mexico, Guatemala, Ecuador, Peru, and Bolivia, but is of relevanceto all continental Spanish American countries with the exception of Panama,the Caribbean, Costa Rica, Uruguay, and Argentina, where hardly any Indianslive today.

The second cleavage which is common to most countries in the worldis between urban and rural areas. Education and health services were developedfirst in the towns and radiated only very gradually into the rural areas.During colonial times a very small fraction of the population had access tosocial services, which were overwhelmingly the responsibility of the Church.After Independence Latin America went through a period of political turmoilwhich lasted for over a century, during which little progress was achievedin the provision of social services, except in the "Southern Cone" areas ofimportant nineteenth century European settlement (Argentina, southern Brazil,Uruguay, and Chile). This turmoil lasted, in most of Latin America, untilthe early (and in some countries, mid-) twentieth century, and retarded socialprogress by undermining institution-building. Once education and (to a lesserextent) health programs were allowed to develop owing to lessened political

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insecurity, their progress focused essentially on the urban centers. Pre-warefforts at extending education (and later health) to the rural areas were mademainly in the areas of European settlement, and in Mexico, during the late1930s, when the revolutionary aspects of the Constitution of 1917 were beingstressed. The remainder of Latin America had to await the post-war era andparticularly the 1950s and 1960s to witness the extension of public education(and to a lesser extent) health facilities into the rural areas.

The urban/rural split has been aggravated by the very success thatLatin America experienced in developing nonagricultural activities. More thanin any other area of the developing world, cities grew at phenomenal rates inLatin America. By 1970 the urban population made up more than 75 percent ofthe total population in the Southern Cone area. In Mexico and Brazil theshare was near 60 percent. Between 1950 and 1970 the population of Braziland Mexico went up by 63 million persons; out of these, 50 million were addedto urban areas, or 80 percent of population growth.iI This enormous proportionis not atypical for many countries in Latin America. In the face of suchpowerful demands for social services on the part of the urban populationsrural expansion was given lower priority, even though some 40 percent of theRegion's population still live in rural areas.

In most of Latin America the center of gravity of political powerhas shifted away from the rural areas and into urban areas, as a result ofurbanization and of the development of nonrural forms of activity. Thusmatters of national interest have come to be identified more and more withthe interests of the urban populations (or urban elites and middle classes).The exclusion of the illiterate from voting in national elections (eitherformally as in Brazil, Peru, and, until 1979, Ecuador, or informally as inmuch of the rest of Latin America) combines with the phenomenal surge ofurbanization to bias the allocation of public education and health fundsoverwhelmingly in favor of the cities. Until recently urban education andhealth services were geared mainly to the needs of the middle classes, but asthese needs were satisfied in city after city, expansion of basic servicesbenefited more of the urban poor.

This left much of the rural areas backwaters of national life, exceptfor a few prosperous agricultural areas found mainly in the Southern Cone.Rural politics, in the remainder of Latin America, became largely localpolitics. Whether this "marginalization" of rural political power had aneffect on the welfare of the rural population cannot be stated with certainty.In some cases the shift may have been beneficial; for example, in Peru theopposition of many hacienda owners to the creation of primary schools hasbeen weakened considerably as their assets have become largely urban. Insome cases the shift may have been detrimental, as when the weak politicalpower the rural populations had been able to exert through their representativesin the capital was weakened further. On the other hand, from a purelyfinancial point of view, the cost of extending basic education and healthservices to the rural areas has clearly gone down sharply relative to resourceavailabilities as the rural areas have been losing demographic weight. Thisshould make it less expensive than in the past to provide better social services

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in these areas. Together with the gradual saturation of basic social needsin the cities and the natural tendency of national bureaucracies (includingthose dealing with basic education and health) to expand their sphere ofactivity, the relative cheapening of attacking the rural problem helpsexplain recent initiatives in these areas.

The Present Situation

As in most developing regions in the world, the social conditionsof Latin America remain deeply influenced by the rural/urban cleavage. Butthere may have been more progress in the urban areas than in other parts ofthe developing world. In the absence of reliable aggregate statistics forthe Region this section focuses on the situation in a few countries. LatinAmerica can bw divided into four groups of countries. The first (Group A)includes Argentina, Uruguay, and Chile (as well as the south of Brazil).These areas have reached advanced levels of "basic needs satisfaction," andcan be found on most "social indicators scales" about three-quarters of theway toward Canada, France, Italy, and the United Kingdom. The second group(Group B) includes Costa Rica, Cuba, Panama, and most English-speakingCaribbean countries. These countries have made particularly strong effortsin education and health and have achieved impressive results without, however,reaching the coverage of the first group in higher education. The third(Group C) is the largest because it includes Brazil, Colombia, Mexico, Peru,and Venezuela. These countries have achieved considerable economic andsocial success and clearly belong to the "middle-income countries," but theyare also dualistic, with very large differences in social coverage betweenurban and rural areas and between Indian groups and the rest of the population.The last group (Group D) of countries is predominantly rural, and is alsocharacterized by sharp differences between urban and rural social coverage.It includes Guatemala, El Salvador, Honduras, Nicaragua, Bolivia, Paraguay,as well as Haiti and the Dominican Republic. This last group of countrieshas yet to provide full primary education coverage, but this problem alsoremains in the rural areas of the third group of countries. In fact, exceptfor the absence of a fairly advanced urban sector, the countries in the lastgroup share the problems of the poorer rural areas in the third (and largest)group. Thus, leaving aside the European settlement areas of the SouthernCone, and a few countries in the second group, the bulk of Latin America canbe considered as one when dealing with the poorer rural areas. The followingtable illustrates the dimensions of the problem in 1970:

Latin America and the Caribbean

Total Population Rural Population Urban-to-Rural Ratio(million) (million)

Groups A and B 50* 14 2.6 to 1Group C 190* 79 1.4 to 1Group D 34 24 0.4 to 1*Brazil is in Group C even though its Southern population should be includedin the first group. Countries with a population of under one million (1970)are left out.

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The table suggests that out of a total (1970) population of about 275 million,a little over 100 million lived in rural areas of countries that are eitherdualistic and/or among the poorest in the Region. The right-hand column providesa guide to the degree of effort required for the modern (urban) part of societyto generate the means to improve the social conditions of the poorer (rural)population. The following paragraphs try to present a picture of socialcharacteristics of these hundred million persons, drawing illustrations fromcountries in Groups C as well as D.

The association between rural life and poor education and healthcan be illustrated in many Latin American countries. The examples presentedhere are from Brazil and Mexico, the Region's two most populou countries.More rigorous statistical evidence might be found in the State Census.volumesbut this is not needed to establish the point. The illiteracy rate was25 percent in Brazil (1973) and 26 percent in Mexico (1970) for persons aged15 and over. Among the larger states of Mexico, the following have the highestrates of illiteracy (1970): Guerrero (48%), Oaxaca and Chiapas (46%), andHidalgo (42%). These are also the four states with the highest share ofrural population averaging 70 percent compared to a national share of 41 percent.Conversely, the three entities with the lowest rates of illiteracy are theFederal District and the States of Nuevo Le6n and Coahuila; these are also themost urbanized parts of Mexico. Likewise, in Brazil the states of the Northeastare characterized by the highest rates of illiteracy and are also the mostheavily rural as measured by the distribution of the population. Typically,urban rates of illiteracy in the poorer rural states are five to six timeshigher than in the major metropolitan areas and their surroundings, Of courseeven in the poorer states, the situation is better than average for the urbanpopulation. The situation is very similar in respect to health services.]./

Much of the rural population of Latin America lives in small isolatedvillages. These' are reached only sporadically by government social serviceadministrations. Typically the inhabitants of these villages have access toonly one school room offering but a few grades of (low quality) tuition; theyalso overwhelmingly lack the most elementary health facilities. The followingstatistics for 1969 illustrate the situation vividly. They are drawn from aninventory of public overhead in some 11,000 Mexican villages with a populationof 500 to 2,500, encompassing about half Mexico's rural population. There wasno classroom whatsoever in 34 percent of the villages. In the states ofGuerrero, Hidalgo, and Puebla more than 60 percent of the villages have noclassroom at all.4/

In only 14 percent of the villages was there a health post. And whilethe (1970) number of persons per medical doctor in Mexico City was 474 (farless than the national averages in France, the U.S., Sweden, and Switzerland),in the state of Oaxaca there were 5,612 persons per doctor (a lesser coveragethan the national averages in Gabon, India, and Pakistan). The discrepancybetween urban and rural coverage is much higher in health than in education.The situation in Mexico is not very different from that in the other countriesin Group C.5/

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In the less advanced countries (Group D) coverage of social servicesis thinner still. In Guatemala, for example, in 1968 only 37 percent of theprimary-school-age population (7-14 years) regularly attended school, butattendance was between 65% and 70% in urban areas, and about 20% in ruralareas; in many rural localities, there were no primary schools. Two-thirdsof rural schools did not offer more than the third grade. The rate of ruralilliteracy was over 75% for the rural working population of Guatemala, whereethnic differences are an important fact of life. The provision of healthservices to the rural population has also been minimal. Qre-half of the 325municipalities in Guatemala lacked a health post in 1968.2/ Similarly, inEl Salvador, fewer than 20 percent of rural children reached the sixth gradein 1976. Only 30 percent of rural schools offered fifth grade or higherlevels. About 50 percent of the population over age 25 is illiterate. Thehealth coverage is similarly poor in the rural areas. While in the departmentof San Salvador, the capital city, there were 1,100 persons per doctor, therewere over 30,000 persons per doctor in four predominantly rural departments(1976) .1"

These statistics should not be allowed to conceal the considerableefforts which have been made duri-ng the post-war decades. In countries ofGroup A progress has been aimed at "deepening" coverage in social serviceswhile expanding them. In Group B coverage has increased rapidly, while"deepening" was also achieved. The countries in Group C (encompassing thebulk of Latin America's population) have also made considerable efforts atimproving both coverage and quality of social services. This progress isindicated, for example, by the fall in the rate of illiteracy from older toyounger persons. In Brazil (1973) the rate falls steadily from 53 percentfor persons aged 70 and over and 31 percent for persons aged 40-49, to 19percent (ages 25-29), 15 percent (ages 20-24), and 12 percent (ages 10-19).,/However, because of rapid demographic expansion, and because of the culturaland/or geographical isolation of the "core poverty groups," the absolutenumber of illiterate persons aged 15 and over did not decline in Mexicobetween 1960 and 1970 (some 6.7 million). Nor did the number of Braziliansaged 5 and over without any formal schooling fall between 1950 and 1976(29 and 31 million persons, respectively). At the same time the rate ofilliteracy in Mexico fell from 35 to 26 percent,i/ and the percentaae ofpersons with no formal schooling in Brazil declined from 67 to 35.:U/ Publichealth figures are likely to parallel these trends, judging by the declinesin overall infant mortality rates and the persistence of very high rates inparticular regions.

The following table shows how relative success has not been limitedto the more urbanized areas and has been impressive in some of the pooreststates of Mexico. It also shows, however, that the absolute number of illiterateshas not declined in the most urbanized states of Mexico (largely because ofthe massive influx of migrants) and has declined only little in the pooreststates.

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Illiteracy Among Persons Aged 15 and Over i/

1960 1970 Percent ChangeNumber of Number of In numbers In sharesIlliterate IlliteratePersons Persons(1,000) Percent (1,000) Percent

Mexico 6,746 35 6,699 26 -1 -26

Federal Dist. 410 14 404 10 -1 -29Nuevo Le6n 110 18 113 12 +3 -33Coahuila 83 16 83 14 - -13

Chiapas 371 55 375 46 +1 -16Hidalgo 304 56 264 42 -13 -25Guerrero 393 61 400 48 +2 -21Oaxaca 578 58 502 46 -13 -21

These trends in a country that has made a serious effort to expand coverageclearly show the difficulties involved in improving coverage, especially inthe face of rapid urban growth. To some extent these trends reflect the rapiddemographic growth which in turn has led to a high proportion of school-agechildren (42 percent of Latin Americans are under 15 years of age; in Peru theproportion is as high as 48 percent). In rural areas of heavy emigrationthe ratio is even higher. This makes the task of educating the young incomparablymore difficult than in Europe in the nineteenth century, when the proportion ofyoung people was less than one half of the present-day Latin American levels,and expectations may have been lesser.

The Future

The financial aspects of human resources improvements are dealt within a separate section. This section merely pulls together some of the mainforces and constraints that will continue to be at work in Latin America overthe next few decades. The discussion is limited to education but developmentsin health and nutrition are unlikely to diverge from what occurs in education.

Throughout most of Latin America individual demands for educationare clearly strong. This is evidenced by a large number of private educationestablishments at all levels, which are competing with public education. Thesedemands are also made clear by the prevalence across a wide spectrum of thepopulation of persons taking evening or other part-time courses, includingdomestic servants. These courses often provide little more than a certificatewhich may facilitate a modest degree of upward mobility. The "micro-economic"demand for education is also illustrated in the rural areas of some countrieswhere a school teacher becomes the focal point of social and often politicalmobilization against various forms of local monopolies or oligopolies, aswell as an important intermediary between the villagers and governmentbureaucracy.

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On a "macro-economic" level, the educational profile of the populationof any country is naturally closely related to the occupational structure ofthe labor force. So, for example, while in Brazil 40 percent of the populationemployed in agriculture had no formal schooling in 1973, only 11 percent of thoseemployed outside agriculture were in that situation; likewise, the proportionof persons with secondary education was, respectively, 3 and 26 percent.13/In Argentina 13 percent of those employed in agriculture had nc formal schooling,but only 3.5 percent in manufacturing; similarly, only 5 percent of thoseworking in agriculture had one or more yearssecondary school, while 20 percentof those worXing in the manufacturing sector had reached that level of formaleducation. /

The following table shows a very simple illustrative projection basedon the relationships between sector of occupation and education in Brazil.The (extreme) assumption is that no "human capital deepening" will occur ineach of the sectors of occupation; the difference between the figures for Braziland Argentina mentioned in the previous paragraph shows that this is unrealistic.Therefore a second projection will sketch out what demands would be made on theBrazilian education system if the educational structure within sectors wereto tend toward that of Argentina. But the first projection below is alreadyhighly suggestive of the minimum demands for education. The only change betweenthe 1973 figures and those for "the future" is that the share of agriculture intotal employment declines from 40 to 25 percent. The proportion of personsby levels of education within each of the two sectors of the economy is heldconstant.

Changes in the Educational Composition of Employment (No Deepening)(percent)

"The Present" (1973) "The Future" Changes in EducationalCategories

Agr. Nonagr. Total Agr. Nonagr. Total

No formal 16 6 22 10 8 18 -18schooling

Primary 23 34 57 14 43 57

Secondary 1 16 17 1 19 20 +17

University - 4 4 - 5 5 +25

Total 40 60 100 25 75 100

The right-hand column suggests that the simple structural shift from agricultureto nonagricultural occupations alone would generate substantial demands forsecondary and university education. The increases in the proportion of the

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total employed population that would be required is of 17 percent in secondaryeducation and 25 percent in university education. To achieve such an increasein the total employed population requires far larger increases in educationalefforts, since nearly all the increase will concentrlate on younger persons.

The second projection brings "Brazil today" to the structure of"Argentina today."

Changes in the Educational Composition of Euloyment(With Deepening to Argentina's Levels)

(percent)

"Brazil Today" "Argentina Today" Changes in EducationalCategories

ALr. Nonagr. Total Agr. Nonagr. Total

No formalschooling 16 6 22 2 3 5 -77

Primary 23 34 57 12 56 68 +19

Secondary 1 16 17 1 20 21 +24

University - 4 4 - 6 6 +50

The demands on the educational system are somewhat stronger in this case,especially at the higher levels (the share of the total employed populationwith university education would rise from 4 to 6 percent). But the most strikingdifference between the two projections is the considerable reduction in theproportion of persons without any formal schooling involved in the shift between"Brazil today" and "Argentina today."

The past trends are consistent with these projections. The patternin Latin American educational expansion can be gathered from the following table:

Enrollment Indexes (1960 = 100)11/19 75

Central Americaand Caribbean South America

Primary 99 214

Secondary 164 301

University 318 626

Much the strongest increases in enrollment have occurred at the universitylevel, followed at quite a distance by secondary enrollment. Primary enrollmentincreased least of all.

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The implications of these simple calculations are of great importancefor the future of human resources improvements in Latin America. The verystrong suggestion is that changes in the composition of the labor marketthat go hand in hand with modernization are likely to put the greatest pressureon secondary teacher training and university facilities. This is a characteristicthat has been much criticized in the past, yet which is quite consistent withgradual structural changes and modernization. If the developments followthese trends (and there are overwhelming reasons to believe that they shouldas part and parcel of economic progress), then occupational shifts out ofagriculture will continue to be one of the most influential forces shapingthe demand for education. This means that migration to the cities and improve-ments there will continue to dominate the scene, and, unless rural industriesdevelop at an unprecedented rate, rural education should be heavily gearedto prepare would-be migrants.

The implication of continued rural-urban migration on a large scaleis that it should become easier to reach high rates of education coverage asmore people live in the cities (where they can be educated more effectively).The following arithmetic example suggests that even if rural coverage remainsconstant and urban coverage increases gradually, the overall coverage willincrease substantially.

Year Percent Rural Rural Percent Urban Urban TotalPopulation Enrollment Population Enrollment Enrollment

(6th grade) (6th grade) (6th grade)

1980 40 50% 60 80% 68%

1990 30 50% 70 85% 74%

2000 25 50% 75 90% 80%

In some Latin American countries the rate of urbanization has been strong enoughto stabilize or reduce the absolute size of the rural population. As morecountries cross this thresh,old, rural education and health coverage can beexpanded with less additional effort. In this respect Latin America differsfrom most developing regions in the world.

The implication is, then, that the "forces of development" will notsuffice to provide reasonably good education (and associated health and nutrition)services to the bulk of the populations now residing in the rural areas, andindeed that the "hard core" of rural poor may not benefit from better servicesunless direct action on the part of the governments is intensified. It isunclear, however, where the political forces that would be conducive to suchdirect impact programs would be generated, since the potential beneficiariesare most marginal in terms of political power and are likely to be consideredincreasingly so with continued structural change.

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Costs of Exanding Social Services

A number of recent World Bank and other reports have attempted toquantify the costs of extending social services to the entire population ofvarious countries. These calculations are typically cast in the form ofprojections. These projections include some assumptions about overhead costs(central administration) and the multiplication of unit costs by the numbersof individuals to be "covered." Generally, projections of this kind lead tothe conclusion that social services can be provided "cheaply" (in terms ofpercentages of GNP) even when unit costs are computed very conservatively(i.e., very high). Often, however, the same reports point to nonfinancialproblems that stand in the way of universal coverage, but fail to come toterms with these problems -- essentially problems of "delivery" or "access."The impression is often left, therefore, that political interests alone areinhibiting the expansion of social services. And since political scienceusually lies outside the stated realm of competence of the authors of suchpapers, one is left with an uncomfortable feeling about their conclusions.

The low costs projected in such reports often contain two assumptions.First, some form of fairly radical administrative change is often assumed(barefoot doctors and their equivalents in education). Whether or not thesechanges are acceptable to government bureaucracies, teachers' trade unions,medical associations, etc. depends greatly on the circumstances of particularsocieties. Unit costs may rise as the demand for qualified teachers andmedical personnel accelerates. Even where such changes are dncouraged bygovernment, they will usually occur on an experimental basis in the formof pilot projects. Thus the pace at which the new systems will become asignificant part of the education and health bureaucracies becomes an importantquestion. Projections often are overoptimistic on the pace of extension ofnew-style systems, and do not deal explicitly with problems such as theacceptability of new systems (a) in rural areas so far not covered at all;(b) in rural areas where the new and old systems would both exist at the sametime in different villages; and (c) in urban areas, usually in slums. Sincein most Latin American countries these new systems are quite recent (and areindeed parts of pilot schemes), it is hard to assess the true cost of general-izing them and is also very tempting to exaggerate the pace at which the newsystems can be expected to become more generalized. These enormous areas ofuncertainty allow for great variations in the projected costs of providinguniversal services.

A second assumption commonly found in projections of this kind isthat of ceteris paribus.. New-style basic services are expanded while theless basic services (secondary, vocational, university education; traditionalhospitals; urban facility improvements) are to grow only slowly if at all.This ceteris paribus subsumes that the most powerful and vocal politicalgroups, i.e., the haves," including particularly those persons who have onlyjust reached the lower rungs of the urban middle class and whose position onthe social ladder is still insecure, will accept a redirection of effort, ifit means a slow-down (or even, perhaps, only the slight attenuation ofacceleration) as far as the provision of social services to their families

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is concerned. Far more likely, the government will be submitted to strongpressures to continue improvements in "nonbasic" facilities on the part ofthose who benefit from them. Thus, for every unit of additional expenditureamong the poor, it may be realistic to budget for several units of expenditurefor the improvement of "nonbasic" social services.

Finally, in Latin America public service strategies have as a rulemeant upgrading as well as expanding services, even in the rural areas. Countriesthat have achieved very high coverage (e.g. Panama and Cuba) have clearly followeda strategy of applying urban expenditure levels to rural areas. The importanceof large private education and health systems in most Latin American countries,which compete with public services, may have reinforced the tendency on thepart of governments to strive at "more than basic" objectives.

Statistics on education and health unit costs are very poor. There-fore it is not possible to support or refute "inexpensive projections"unequivocally in the light of experience. Attachment Table 1 shows currentcosts per primary school student by country in 1965 and 1975, and grossprimary school enrollment. The following matrix emerges.

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Enrollment Levels and Trends

High Enrollment Low Earollment- /Slow Rise RapidRise Rapid Rise Slow Rise

High Unit Costs9/ Argentina Guatemala

(slow rise) Uruguay

(rapid rise) Costa Rica Barbados - Venezuela3/Chile PanamaJamaicaTrinidad and Tobago

Low Unit Costs Brazil BoliviaMexico Ecuador

(rapid rise) HaitiParaguay

(slow rise) - - Dominican Rep. ColombiaHonduras El SalvadorPeru Nicaragua

1/ Enrollment refers to 1965; "high" means 100 percent gross primary enrollmentor more; "rapid rise" means above average rise for Latin America during1965-75.

/ Unit costs refer to current costs per primary school student in 1975;"slow" rise means slower than average for Latin America during 1965-1975.

3/ Venezuela's primary school enrollment increased at the average rate forLatin America.

Source: Attachment Table.

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With the exception of Guatemala, where unit costs were marginallyabove the regional average, and Venezuela, where unit costs are high butcoverage (and increase in coverage) are not, the countries cluster into twoclear groups: those with high enrollment and high unit costs, and those withlow enrollment and low unit costs. Furthermore, in six out of eight countrieswith high enrollment, unit costs have risen, over the period 1965-1975, fasterthan average. These associations are very far from statistical perfection butthey are consistent with the hypothesis that historically in Latin America andthe Caribbean wide coverage education services require substantially morefinancial resources than poor ones. This is intuitively fairly obvious butmay be at variance with the "basic needs coverage" projections mentioned above.These associations certainly do not rule out the possibility of profoundchanges that might lead to the feasibility of low-cost adequate and comprehensiveeducation services, but merely suggest that until now there is no such experiencein Latin America on a scale large enough to influence overall cost figures.Attachment Table 2 shows education expenditure (for all levels) as a share ofcentral government financial flows. While in some countries poor educationcoverage absorbs a high share of government revenue (Bolivia, Ecuador, Honduras,Peru), in Costa Rica and Panama, where coverage is high both in urban and ruralareas, and the quality of education better than in most Latin American countries,education absorbs the highest proportion of central government flows (some37-40 percent of total tax revenue and, in Costa Rica, one third of totalcentral government expenditure as compared to an average, respectively,of 24 and 19 percent for all countries on Attachment Table 2). In spite ofreasonably high tax revenues, Costa Rica and Panama have been facing frequentfiscal problems.

Vocational training has also proved to be expensive if it is to beeffective. It involves expensive capital equipment (automotive, officeequipment, machine tools, etc.) This is probably why some of the mosteffective vocational training schemes in Latin America are financed largelyout of earmarked industrial and commercial taxes rather than general governmentrevenues.

Nonformal education does not seem to offer an inexpensive solutioneither. At the November 1976 Washington conference on the financing ofeducation in Latin America it was the consensus view that nonformal educationexpansion runs into rising unit costs. This is attributed to (a) the need forbetter and more dedicated teachers, implying higher salaries; (b) the needfor better materials, particularly printed materials; (c) the need forbetter facilities (school rooms), and (d) the need for more central servicesfor coordination, supervision, etc.

Local communities might contribute more to financing education.According to project experiences in Panama, Honduras, and Cuba, between 25and 50 percent of operation and maintenance costs can be financed out ofcommunity contributions; and 15 to 30 percent of capital costs can be financedout of community contributions. Furthermore, between 25 and 50 percent ofoperation and maintenance costs can be financed out of surplus from salesof goods produced at school. However, in practice school farms have not beensuccessful in Latin America because of low levels of technology and competence.16/

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A further (and perhaps more feasible) source of financing is theixtroduction of private fees in secondary and higher education institutions,for students whose parents can afford to pay.

At a recent conference on the costs and financing of education(Mexico, November-December 1978) a calculation was presented of the scopefor private financing of education (by substituting fees to governmentfinancing) and of the increase in the public education budget required toprovide broader primary coverage. The results are s = ed up in the followingtable:

Costs of Increased PrimarY Coverage and Scope forPrivate Financing in Latin AmericaNL/

(as a percent of total present public education expenditure)

Most advanced Second most Second least Leastcountries, advanced advanced advanced

countries countries countries

A. Four years primary 15.7 21.5 27.2 29.8education for allstudents who nowattend school

B. Four years 23.8 37.9 55.3 93.3primary educationfor all children

C. Resources freed 17.3 12.6 15.9 12.5as a result ofpayment of secondaryand university fees

Since Latin American countries typically spend 3 to 4 percent of GNP on publiceducation, making up 15 to 20 percent of central government expenditure, thistable suggests that especially in the least advanced countries the costs ofuniversal coverage are quite substantialt even for a goal as modest as fouryears' primary school for all children.1 / Furthermore, the scope for substi-tuting private fees for public financing is narrowest in the countries thatrequire the greatest increase in expenditure. These findings are consistentwith the historical record outlined earlier, and with the hypothesis putforward at the beginning of this section, which is likely to apply in healthas well as in education.

Attachment Table 1

Recurrent unit cost per primary school pupil Primary school enrollment as percent(US$ of 1973) of relevant age group

1965 1975 1975/1965 (%) 1965 1975 1975/1965 (%)

Argentina 199 200 +0.5 101 115 +]4Barbados 70 100 +43 111 142 +28Bolivia 34 38 +12 79 83 +5Brazil 38 45 +18 76 93 +22Chile 78 125 +60 116 120 +3Colombia 52 37 -29 87 98 +13Costa Rica 73 90 +23 107 120 +12Dominican Republic 30 24 -20 89 106 +19Ecuador 22 29 +32 91 105 +15El Salvador 45 34 -24 84 83 -1Guatemala 59 70 +19 55 57 +4Haiti 21 26 +24 40 38 -5Honduras 49 45 -8 73 93 +27Jamaica 42 92 +119 149 121 -19Mexico 34 42 +24 94 115 +22Nicaragua 52 44 -15 69 76 +10Panama 89 108 +21 105 132 +26Paraguay 18 22 +22 104* 93* -11*Peru 54 48 -11 89* 115* +29*Trinidad and Tobago 50 69 +38 113 115 +2Uruguay 134 129 -4 111 105 -5Venezuela 133 146 +10 95 104 +9

LAC Total 61 64 +5 87 101 +9

Source: Financiamiento de la Educaci6n en America Latina, Brodersohn and SanJurjo eds., IDB, 1978.

*Source: IBRD.

- 192-

Attachment Table 2

Education Ex=enditure as a Share of Central Government FloWs(selected countries)

Education Expenditure as % of:Total Expenditure Total Revenue Total Tax Revenue

Bolivia 1973 28.3 28.3 28.51977 25.8 27.8 28.1

Chlile 1972 14.7 19.7 22.61974 12.6 14.2 15.7

Costa Rica 1974 33.3 37.4 39.4

Dominican Rep. 1973 14.2 14.8 17.81976 11.3 11.0 12.9

Ecuador 1973 28.1 27.6 28.31976 23.2 26.6 30.1

Guatemala 1972 19.5 21.8 24.01976 16.4 17.6 19.0

Honduras 1972 22.3 27.1 31.51976 20.7 24.1 27.7

Mexico 1972 16.2 19.4 21.11975 17.8 22.5 23.5

Nicaragua 1972 16.6 20.0 21.71976 16.9 19.6 21.9

Panama 1973 22.1 28.0 34.21976 22.3 31.7 37.4

Paraguay 1972 12.1 13.7 15.81974 13.6 12.1 13.3

Peru 1973 22.9 28.4 31.11977 19.6 23.5 26.2

Uruguay 1973 11.8 12.3 13.81977 16.8 17.5 18.6

Venezuela 1972 17.1 17.4 23.41976 13.2 13.1 16.8

Source: UNESCO Yearbook 1977

- 193 -

Footnotes

1/ IBRD, "World Tables 1976."2/ Ibid.3/ "Pesquisa Nacional por Amostra de Domicilios (Populagao - Mao de Obra -

Salaric - Instrugao - Domicilio)," FIBGE, 1973; "La Poblaci6n de Mexico,su Ocupaci6n y sus Niveles de Bienestar," Secretaria de Programaci6ny Presupuesto, no date.

4/ "Programa de Obras y Servicios en el Medio Rural," Resumenes porprogranas de las obras catalogadas en 1969, Feb. 1969 (mimeo)."La Poblaciin de Mexico . . ." op. cit., and IBRD, "World Tables 1976."Richard Webb, "The Incidence of Government Policy on Poverty inGuatemala," (mimeo, no date).

7/ "Demographic Issues and Prospects of El Salvador -- a Special Report,"(IBRD, 1979).

8/ "Pesquisa Nacional . . ." op. cit.9/ "La Poblaci6n de Mexico . . ." op. cit.10/ 1950 Population Census of Brazil and 1976 PNAD Survey (FIBGE).11/ "La Poblaci6n de Mexico . . ." op. cit.12/ ECLA, "Economic Survey," 1973.13/ "Pesquisa Nacional . . ." op. cit.i/ Fundaci6n de Investigaciones-Economicas Latinoamericanas (FIEL) in

internal IDB Project Report.15/ UNESCO, Statistical Yearbook 1977.16/ "Financiamiento de la Educaci6n en Ame'rica Latina," Mario Brodersohn and

Maria Ester Sanjurjo eds., Fondo de Cultura Econ6mica and BID, 1978.17/ "Cost, Financing and Expansion of Education," Luis Ratinoff and Maximo

Jeria, Seminar on the Financing of Education in Latin America, Mexico,November 27-December 1, 1978 (mimeo). The groups of countries in thistable differ slightly from the classification in section two of thispaper.

18/ A study by Claudio de Moura Castro and Jorge A. Sanguinetty ("Custos eDeterminantes da Educagao na America Latina," Instituto de TecnologiaEducacional, Rio de Janeiro, 1978) also suggests that in practice unitcosts in rural schools may be as high as in urban areas; numericalexamples are offered in support of this view for Argentina and Bolivia.In contrast, in Ecuador rural unit costs are somewhat lower than urbanunit costs, and in Paraguay they are less than half of urban costs.

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