1. Sub-National Growth Dynamics: Insights from Macro-GDP and Micro-Survey Data
Binayak Sen
December 12, 2005

2. Motivation for the Paper
Some Stylized Facts
Acceleration of Growth in the 1990s (and beyond) compared to 1980s
Pronounced rise in inequality
Considerable progress in poverty, human development and social indicators
Weak sign of “social convergence”

3. Motivation for the Paper (2)
What is the sub-national story underlying the growth dynamics?
How different are regional growth rates?
Has spatial inequality become sharper?
Any sign for “regional growth convergence”?
What lessons from sub-national data for future national growth?
Is there a role for “regional policy”?

4. What is “sub-national” level?
Spatial differences across division (6), region (20 “old” districts), new district (64)
Data Source: macro-GDP by region; micro-expenditure by region and district; census information on district

5. Considerable Regional Differences
Considerable regional concentration in income/ expenditure
Dhaka/ CTG Division—55-60% of total GDP and Survey Expenditure
Dhaka/ CTG Region—30% of total GDP and Survey Expenditure
Considerable regional variation in growth

6. Regional Growth Differences

7. Regional Growth Differences (2)

8. Regional Growth Differences (3)

10. What Explains the Regional Growth Variation?
Possible Key Factors
Human Capital: +ve
Initial Income (Expenditure) Inequality: -ve
Urbanization: +ve
Agricultural Technology: +ve
Gender Inequality: -ve
Large Landholding: + or -?

11. Human Capital and Growth

12. Human Capital and Growth (2)

13. Human Capital and Growth (3)

14. Gender Inequality and Growth

15. Gender Inequality and Growth (2)

16. Initial Expenditure Inequality and Growth

17. Large Landholding and Growth

18. What Explains the Regional Growth Variation? (2)
Results of multivariate analysis confirmed the predictions
Regional growth convergence (both conditional and unconditional)—yes
However, (a) the “speed of convergence” is very slow, (b) the trend can change if “inequality” is not addressed

19. Results of Multivariate Analysis

20. What Matters Most: Within-Region or Between-Region Inequality?
Total inequality (i.e. inequality in inter-personal income) is mainly explained by within-region inequality
Sharp rise in within-region inequality; slight increase in between-region inequality
Consistency with regional growth convergence

22. New Growth Agenda
Human capital requirements vary with stages of development: Confronting new challenges
Rethinking “new technology” in the phase of agricultural diversification

23. New Growth Agenda (2)
Urban Futures: Putting “urban” on the growth agenda:
Tapping mega-city potentials
Changing fortunes of district towns
Understanding dynamics of “meso-economy”

24. New Growth Agenda (3) Initial income inequality depresses growth
Addressing new sources of income inequality:
Land vs. non-land sources

25. New Growth Agenda (4)
Inclusion of “missing factors” for future analysis:
Infrastructure
Access to finance
Regional governance
Need for periodic regional data