Research Agenda

Background

Sri Lanka is well known for achieving high levels of human development at relatively low levels of GDP per capita. This is largely a result of heavy investments by the successive governments of Sri Lanka, particularly in 1960s and 70s in the areas of health and education and social welfare. Despite these efforts and significant progress in human development indicators, the incidence of poverty in the country has continued to remain high over the past many decades. Currently, around 23 per cent of the population lives below the poverty line. Further, considerable variations in poverty levels can be observed across sectors and districts.

There are a number of factors that have contributed to the persistence of poverty in Sri Lanka. Neither the economic growth rate nor its distributive effects during the last two decades have been sufficient to bring about a significant reduction in poverty levels of the country. Moreover, the civil war that lasted for over 20 years has caused immense human suffering and deprivation. Low productivity in the agricultural sector, poor infrastructure facilities and limited access to basic social services in rural areas, labour market distortions and problems of governance have also contributed to the high incidence of poverty in Sri Lanka.

In this context, the unit has identified the following themes as the key areas of research over the next 2-3 years:

Research Programme

Role of Microfinance and Poverty Alleviation

Rationale

Microfinance has attracted a great deal of international attention in recent years, as an effective instrument for reducing poverty and improving welfare of households. In Sri Lanka, provision of microfinance services to low income households has a long history dating back to the early years of the twentieth century. Currently, there is a wide range of institutions – banks, co-operatives, Government and Non-government organizations - that are involved in providing microfinance services. Despite the long history of microfinance and the large number of institutions involved in providing microfinance facilities in Sri Lanka, their effectiveness in alleviating poverty in the country is not clear.

Objectives

The study will provide a detailed picture of the availability of microfinance services (loans, savings, and insurance) to low income households in Sri Lanka. It will analyze the outreach of microfinance in terms of its extent, scale, depth and spatial outreach, and assess its impact on alleviating poverty in the country. Furthermore, the effectiveness of providing non-financial services such as training, marketing facilities and various Business Development Services (BDS) along with the financial services will also be looked at in the study.

Nexus of Economic Growth, Employment and Poverty Reduction

Rationale

The experience of countries that have succeeded in achieving a significant level of poverty reduction indicates the importance of sustained high growth in attaining this result. However, high growth alone is not sufficient for reducing poverty; the pattern and sources of growth and the manner in which the benefits of growth are distributed are also important to achieve the goal of poverty reduction. Employment plays a key role in linking economic growth and poverty reduction. Empirical evidence shows that countries which have attained high rates of employment growth alongside high rates of economic growth are the ones that have been successful in reducing poverty significantly.

Objectives

The study will analyze the link between economic growth, employment and poverty reduction in Sri Lanka. The extent to which the growth in output has led to creation of employment and thereby poverty reduction will also be analyzed for the three key sectors of the economy, i.e., agriculture, industries and services.

Education and Equity

Rationale

Successive governments of Sri Lanka since independence have adopted a Universal Free Education Policy aimed at providing free educational facilities to all school children from primary to university level. These policies were expected to provide the poor with opportunities to raise their social and economic status, and hence help them to move out of poverty over time. Nevertheless, there exist large disparities in the resources and facilities available for schools in different areas. Evidence shows that many schools in rural areas do not have adequate resources, facilities and teachers. Furthermore, despite large spending by the government on various incentive programmes (e.g., provision of free school text books), the benefits of these programmes are largely received by the students in urban or rich schools.

Objectives

The study will analyze the extent of disparity in resources and facilities among schools in urban and rural areas, and across districts/provinces. Furthermore, it will attempt to bring together the views of various stakeholders in the education sector like Government officials, teachers, students and parents to find out ways to minimize the disparities and improve the quality of education in Sri Lanka.

Chronic Poverty in Sri Lanka

Rationale

The level of human development in Sri Lanka is at par with many developed countries. However, around one-fourth of the population of the country has continued to live in poverty. Although poverty levels have been monitored over many decades, information on the magnitude of the chronically poor (those who have been poor for many years and who are likely to remain poor) and their characteristics are not known. Further, chronic poverty has not been considered an area of concern in Sri Lanka. Therefore, research is required to identify the chronically poor and the factors contributing them to remain in poverty over a long period of time.

Objectives

This study will examine the dynamics of poverty among the chronically poor, their characteristics and various factors that limit these individuals/households and groups from escaping poverty. The study will include longitudinal surveys in selected locations. The suggested locations for the study are:

• A remote rural village which by its location limits mobility, access to services and opportunities.
• An area within the conflict zone of the country where livelihoods are not stable, and mobility and accessibility to services and opportunities are restricted.