A look at prosperity

Prosperity is one of the most elusive things to define. Sri Lanka’s prosperity has increased in 2018 when compared to the previous year, according to the latest prosperity index released by the Central Bank. But understanding where the gaps exist and finding ways to bridge them remains a challenge. 

Under this index, all provinces have fared reasonably well with economic and business climate improvements seen across the country, largely due to price stability and increase in informal wages. Prosperity increases have been observed in all provinces, but Western Province predictably leads, while Sabaragamuwa has edged to first position in well-being of people. East fared worst in socio-economic infrastructure, due to subdued levels of telecommunication facilities, road developments, crime-free environment, and female participation in civic activities.     

As the world grows wealthier and extreme poverty becomes more concentrated, there are legitimate questions over whether $1.90 is too low to define whether someone is poor in all countries of the world. In half of the countries in the world, extreme poverty is at or below 3%, but that doesn’t mean the fight to eradicate poverty is over in these countries. The World Bank now reports on two higher-value poverty lines: $3.20 and $5.50 per day. 

These lines, which are typical of standards among lower- and upper-middle-income countries such as Sri Lanka, respectively, are designed to complement, not replace, the $1.90 international poverty line. Data suggest that the rapid gains against extreme poverty have not been matched by reductions in the number of people living below these higher levels of income. In 2015, over a quarter of the world’s population survived on $3.20 per day and nearly half of the world still lived on less than $5.50 per day.

As countries seek to end poverty, they also need to recognise that being poor is not just defined by a lack of consumption or income. Other aspects of life are critical for well-being, including education, access to basic utilities, health care, and security. The multidimensional view reveals a world in which poverty is a much broader, more entrenched problem, underlining the importance of stronger, inclusive growth and of investing more in human capital. At the global level, the share of poor according to a multidimensional definition that includes consumption, education, and access to basic utilities is approximately 50% higher than when relying solely on monetary poverty. 

In a sample of 119 countries for the years around 2013, only one in eight are poor in monetary terms, but among them eight out of nine are also deprived in at least one other dimension, lacking education or basic infrastructure services. In the Middle East and North Africa, and Latin America and the Caribbean, despite the low prevalence of monetary poverty, almost one in seven people lack adequate sanitation. 

In Sub-Saharan Africa, more than in any other region, shortfalls in one dimension go hand-in-hand with other deficiencies. Even though South Asia has made progress in poverty reduction, shortfalls in education remain high for both adults and children and aren’t strongly associated with monetary poverty. In addition, the number of people in the region living in households without access to electricity is far greater than those living in monetary poverty.

People experience poverty differently even within the same household. Therefore Sri Lanka’s path to prosperity remains at the forefront of all concerns and will define the Presidential Election on Saturday.