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Why Does Agricultural Growth Dominate Poverty Reduction in Low- and Middle-income Countries?

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  • John W. Mellor

    (John Mellor Associates, Inc., USA.)

  • Chandrashekhar Ranade

    (University of Rhode Island, USA.)

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    Abstract

    This paper provides an explanation of the relation between agricultural growth and poverty reduction for open economies with full employment. The analysis also shows that the poverty-reducing impact of agricultural growth in an open economy is far greater if there is unemployed labour or if the supply of labour is highly elastic— conditions often thought to prevail even in open economies. The model draws attention to the critical role of the rural non-tradable sector in poverty reduction. While ample data are available to show that sector to have a large share of employment, even relative to agriculture itself, data for other variables for the sector such as the share of GDP, labour intensity, price, and income elasticities of demand are not available. Thus, an important contribution of the paper is to establish the need for such data if the processes of poverty reduction are to be understood.

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    Bibliographic Info

    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 45 (2006)
    Issue (Month): 2 ()
    Pages: 221-240

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    Handle: RePEc:pid:journl:v:45:y:2006:i:2:p:221-240

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    Related research

    Keywords: Agricultural Growth; Poverty; Developing Countries; Open Economy;

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    References

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    1. Fan, Shenggen & Chan-Kang, Connie & Mukherjee, Anit, 2005. "Rural and urban dynamics and poverty: Evidence from China and India," FCND discussion papers 196, International Food Policy Research Institute (IFPRI).
    2. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
    3. Mellor, John W, 1978. "Food Price Policy and Income Distribution in Low-Income Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 27(1), pages 1-26, October.
    4. Rangarajan, C., 1982. "Agricultural growth and industrial performance in India:," Research reports 33, International Food Policy Research Institute (IFPRI).
    5. Haggblade, Steven & Hazell, Peter, 1989. "Agricultural technology and farm-nonfarm growth linkages," Agricultural Economics, Blackwell, vol. 3(4), pages 345-364, December.
    6. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.
    7. Lele, Uma & Mellor, John W, 1981. "Technological Change, Distributive Bias and Labor Transfer in a Two-Sector Economy," Oxford Economic Papers, Oxford University Press, vol. 33(3), pages 426-41, November.
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