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Role of Agriculture in Achieving MDG 1 in Asia and the Pacific Region

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  • Raghav Gaiha
  • Katsushi S. Imai
  • Ganesh Thapa

Abstract

This paper examines whether agricultural growth through public expenditure, ODA or investment will improve significantly the prospects of achieving MDG 1 of halving poverty in Asia and the Pacific Region. As more than a few countries in this Region recorded impressive economic growth in the early years of the present decade, the case for the widely used poverty threshold of US$1.25 per day (at 2005 PPP) for assessing progress towards MDG1 is not so compelling now. Accordingly, the present assessment uses two poverty thresholds: US$2 per day and US$1.25 per day (both at 2005 PPP). Our analysis, based on country panel data, confirms robustly that increases in public agricultural expenditure, agricultural ODA, agricultural investment, or fertiliser use (as a proxy for technology), accelerate agricultural and GDP growth. Consequently, the headcount and depth of poverty indices are reduced substantially. Our simulation results show that, for halving the headcount index at US$2 per day, Asia and the Pacific region as a whole would need in 2007-13 a 56% increase in annual agricultural ODA, a 28% increase in agricultural expenditure, a 23% increase in fertiliser use or a 24% increase in agricultural investment. Aggregation of the simulation results for various groups reveals that countries in low income group, with a low level of macro governance or institutional quality, or with low ease of doing business would need larger increase in agricultural ODA, expenditure or investment to halve poverty. Although the share of agriculture in GDP has declined, our analysis reinforces the case for channelling a substantially larger flow of resources not just for accelerating growth but also for achieving the more ambitious MDG1. A policy dilemma, however, is the trade-off between institutional quality and resource transfers. National governments and donors must reflect deeply on triggers for institutional reforms and mechanisms that would ensure larger outlays for agriculture and thei

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Bibliographic Info

Paper provided by Economics, The University of Manchester in its series The School of Economics Discussion Paper Series with number 1104.

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Date of creation: 2011
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Handle: RePEc:man:sespap:1104

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  1. Ravallion, Martin & Chen, Shaohua & Sangraula, Prem, 2008. "Dollar a day revisited," Policy Research Working Paper Series 4620, The World Bank.
  2. Chen, Shaohua & Ravallion, Martin, 2008. "China is poorer than we thought, but no less successful in the fight against poverty," Policy Research Working Paper Series 4621, The World Bank.
  3. R Gaiha & K Imai & M A Nandhi, 2005. "Millennium Development Goal of Halving Poverty in Asia and the Pacific Region: Progress, Prospects and Priorities," The School of Economics Discussion Paper Series 0507, Economics, The University of Manchester.
  4. Katsushi Imai & Raghav Gaiha & Ganesh Thapa, 2010. "Is the Millennium Development Goal on Poverty Still Achievable? The Role of Institutions, Finance and Openness," Oxford Development Studies, Taylor & Francis Journals, vol. 38(3), pages 309-337.
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Cited by:
  1. Raabe, Katharina, 2011. "The Dynamics of Service Delivery and Agricultural Development in India – A District Level Analysis –," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114783, European Association of Agricultural Economists.
  2. Raghav Gaiha & Md Shafiul Azam & Samuel Annim & Katsushi S. Imai, 2012. "Agriculture, Markets and Poverty - A Comparative Analysis of Laos and Cambodia," Discussion Paper Series DP2012-28, Research Institute for Economics & Business Administration, Kobe University.

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