Despite obstacles such as conflict, corruption and high fiscal deficits, south Asia has achieved impressive economic growth and poverty reduction in the past decade, thanks mainly to economic reforms in the 1990s. If this growth accelerates to 10 per cent a year, the region could see single-digit poverty rates by 2015. A closer look at the evidence suggests that much remains to be done to achieve these accelerated growth rates. First, economic growth in the past decade has resulted in growing income inequality, which may act as a constraint to higher growth. Second, while conflict and high fiscal deficits may not have constrained growth in the past, their persistence may become binding in the future. Third, a comparison with east Asia shows that south Asia's export-orientation, inflows of foreign direct investment, workers' skill levels, infrastructure and ease of doing business are also substantially less advanced than east Asia's.
