Income Poverty - A Case Study of Sri Lanka

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: Sri Lanka has been a leading example among developing nations in the fight against poverty. Human development has been a priority of the Sri Lankan government, and many social indicators are today more in line with those of a developed country. Still poverty is a severe and widespread problem in the country. The economic growth has been under the country’s potential, and the unequal development has put the Western Province ahead of the other parts of the country. The aim of this study is to analyze the causes and determinants of poverty in Sri Lanka and to review the official poverty alleviation programme in Sri Lanka, Samurdhi. The focus will be on five determinants of poverty, infrastructure, access to land, access to microfinance, education and health. By putting these determinants in a country specific situation the regional variations and what impact the determinants have on the income can be explained. The analysis is completed with regressions estimated with OLS. The conclusions that are drawn in this study are that all of the five determinants are interacting as they are closely connected. In order to reduce poverty in Sri Lanka all of them will have to be accounted for, but as the regional variations are so strong people living in remote areas are those most in need of measures. Improving the infrastructure can help reduce the domination of the Western province and get a more even distribution of public goods and economic activity. The Samurdhi programme has a very holistic approach and the best intentions, but the problem in the targeting process, the costly administrative sector where corruption has been discovered and the politization of the programme make this programme inefficient. A poverty strategy like the Samurdhi is needed in Sri Lanka, and the exposure of these defaults will hopefully change the course today, so that the people most in need get the help they are entitled to

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