Spatial and Structural Changes in Poverty Reduction in Bangladesh from 2000 to 2016: An Assessment

Abstract

Bangladesh has documented consistent reductions in poverty since 2000 and has also seen considerable transformation in the sector and location of economic activities. This paper exploits variation in sectoral growth and migration across districts and time to examine whether spatial variation in sectoral growth patterns—growth in agriculture, industry, or services—can explain spatial variation in poverty reduction, and what the role of migration was. We control for district fixed effects and instrument growth in agriculture and international migration to explore causal effects. We find that reductions in poverty were largest in places where agricultural output growth was highest and where industrial growth was highest. Poverty reduction was greater in districts which were sending larger numbers of international migrants. The relationship between agricultural growth and poverty reduction holds when instrumenting agricultural growth with rainfall data, and manufacturing growth has a significant impact on poverty reduction when proxied by a Bartik-style instrument, indicating that some of these findings are causal.