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Rural Poverty: Old Challenges in New Contexts

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  • Stefan Dercon
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    Abstract

    Poverty is still a predominantly rural phenomenon. However, the context of rural poverty is rapidly changing across the world, with high growth in some economies and stagnation in others. Furthermore, increased openness in many economies has affected the necessity of agricultural growth for rural poverty reduction. This paper argues that rural poverty alleviation has to be firmly put in the context of rural-urban interactions, and the broader contexts of trade, growth and poverty reduction. In terms of research, it is important to revisit the `old` question related to sectoral land urban-rural linkages: how does development and poverty reduction come about if most of the poor live in rural areas, dependent on agriculture? What is the role of agricultural development in this respect? We conclude that in closed economies, there are strong arguments to suggest that pro-poor growth has to start in agriculture, but in an open economy, this necessity disappears. But this also means that we should particularly pay attention to those settings and contexts in which rural development is the only hope, such as landlocked, resource poor economies, which are typically also countries with relatively low potential for agriculture. In other settings, agricultural growth is just one of many options for shared growth and poverty reduction. When focusing specifically on rural issues, we should focus on situations in which growth may not be able to unlock the potential of the poor, effectively trapping them in poverty. We consider three examples of poverty traps, related to credit, risk and spatial effects. Especially the latter needs more attention in research and policy analysis. Data that can document the nature of rural-urban linkages, internal migration and other forces that can unlock spatial poverty traps are requried to guide our understanding and policy responses.

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    Bibliographic Info

    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number GPRG-WPS-072.

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    Date of creation: 01 Mar 2007
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    Handle: RePEc:oxf:wpaper:gprg-wps-072

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    1. Stefan Dercon, 1996. "Wealth, risk and activity choices: cattle in Western Tanzania," Economics Series Working Papers WPS/1996-08, University of Oxford, Department of Economics.
    2. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
    3. Christopher B. Barrett, 2005. "Rural poverty dynamics: development policy implications," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 45-60, 01.
    4. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Harvard Institute of Economic Research Working Papers 1727, Harvard - Institute of Economic Research.
    5. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-44, April.
    6. Besley, T., 1992. "How Do Market Failures Justify Interventions in Rural Credit Markets?," Papers 162, Princeton, Woodrow Wilson School - Development Studies.
    7. Stefan Dercon, 2004. "Growth and Shocks: evidence from rural Ethiopia," Development and Comp Systems 0409036, EconWPA.
    8. M�ns Söderbom & Francis Teal & Anthony Wambugu & Godius Kahyarara, 2006. "The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(3), pages 261-288, 06.
    9. Datt, Gaurav & Ravallion, Martin, 1998. "Why Have Some Indian States Done Better Than Others at Reducing Rural Poverty?," Economica, London School of Economics and Political Science, vol. 65(257), pages 17-38, February.
    10. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    11. Stefan Dercon, 2002. "Income Risk, Coping Strategies, and Safety Nets," World Bank Research Observer, World Bank Group, vol. 17(2), pages 141-166, September.
    12. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-98, June.
    13. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," World Bank Economic Review, World Bank Group, vol. 10(1), pages 1-25, January.
    14. Ravi Kanbur & Tony Venables, 2005. "Introduction: Spatial inequality and development," Journal of Economic Geography, Oxford University Press, vol. 5(1), pages 1-2, January.
    15. 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.
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