Reforms slash poverty in Sri Lanka’s western province, bad policies worsen it elsewhere

February 08 (LBO) – Economic reforms has slashed poverty in Sri Lanka's western province while backward policies that kept agriculture stagnant in rural areas were trapping people in poverty, researchers have found. Poverty in the western province fell from 19 to 11 percent between 1991 and 2002, with the region growing at twice or three times the rate of other provinces, which were largely based on agriculture.

The researchers also found that growth in inequality was lowest in the Western province, calling into question a popular opinion put forward by some critics of economic growth.

"Western province also experienced the smallest increase in inequality, which is similar to the kind of lesson we have learnt elsewhere," Ambar Narayan, a World Bank economist who co-authored the report said a workshop in Colombo.

"Even within Sri Lanka the faster growing region is not the region which has the fastest increase in inequality. Growth and inequality does not go hand in hand."

The Western Province, the richest region in the country, had the lowest proportional increase measured by the Gini coefficient of 12 percent while the Uva Province, the poorest region, recorded the highest proportional increase