Growth and Equity in Developing Countries: A Reinterpretation of the Sri Lankan Experience |
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| Authors: | Bhalla, Surjit S. Glewwe, Paul |
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| Affiliation: | Surjit S. Bhalla and Paul Glewwe are on the staff of the World Bank. This article stems from a joint World Bank—Central Bank of Ceylon research project entitled Evolution of Living Standards in Sri Lanka, the major funding for which was provided by the Swedish International Development Agency. The authors are thankful for this support and would also like to thank the Central Bank and the Department of Census and Statistics, Sri Lanka, for their generous cooperation. |
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| Abstract: | In the important debate between the proponents of direct (basicneeds) and indirect (economic growth) measures of promotingwelfare, Sri Lanka has frequently been cited as one countrywhich has successfully pursued the direct approachithas raised living standards without much cost in terms of reducedgrowth. This conclusion, however, is based on analyses whichdo not account for the initial conditions of the countries beingcompared. After methodologically incorporating these concerns,neither the improvement in living standards nor the 2.0 percentper capita growth rate during the period of direct policy measures(196078) was exceptional. In contrast, during the periodof more indirect growth-promoting policies (197784),(i) economic growth more than doubled to an average rate of4.3 percent per capita per annum; (ii) expenditure inequalitydid not significantly change; (iii) consumption expendituresof the population, and the poor, generally increased; and (iv)several living standard indicators continued to improve. |
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