IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v29y2014icp27-45.html
   My bibliography  Save this article

Risk, under-investment in agricultural assets and dynamic asset poverty in rural China

Author

Listed:
  • You, Jing

Abstract

This paper seeks new insight into the reasons for persistent hardship in some Chinese rural households from the perspective of assets, stressing the long-run implications of shocks and risk on households' agricultural asset holdings. Households show a tendency to hold onto substantial savings to cope with possible negative shocks, and are predisposed to specialize in low-risk low-return agriculture under ex ante credit constraints and the fear of low welfare outcomes if production plans should be unsuccessful. Overall, households' responses to uninsured shocks and risk cause inefficiencies and deficiencies of investment in agricultural asset accumulation. Multiple equilibria in the dynamics of household agricultural assets as well as under-investment as a response to risk make some households less able to earn income above the poverty line and keep them trapped in long-term low-equilibrium asset poverty.

Suggested Citation

  • You, Jing, 2014. "Risk, under-investment in agricultural assets and dynamic asset poverty in rural China," China Economic Review, Elsevier, vol. 29(C), pages 27-45.
  • Handle: RePEc:eee:chieco:v:29:y:2014:i:c:p:27-45
    DOI: 10.1016/j.chieco.2014.02.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X14000066
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.chieco.2014.02.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bowlus, Audra J. & Sicular, Terry, 2003. "Moving toward markets? Labor allocation in rural China," Journal of Development Economics, Elsevier, vol. 71(2), pages 561-583, August.
    2. Dercon, Stefan & Christiaensen, Luc, 2011. "Consumption risk, technology adoption and poverty traps: Evidence from Ethiopia," Journal of Development Economics, Elsevier, vol. 96(2), pages 159-173, November.
    3. Jalan, Jyotsna & Ravallion, Martin, 2001. "Behavioral responses to risk in rural China," Journal of Development Economics, Elsevier, vol. 66(1), pages 23-49, October.
    4. Chris Elbers & Jan Willem Gunning & Bill Kinsey, 2007. "Growth and Risk: Methodology and Micro Evidence," The World Bank Economic Review, World Bank Group, vol. 21(1), pages 1-20.
    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 223-244, April.
    6. Stefan Dercon, 0. "Fate and Fear: Risk and Its Consequences in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 17(suppl_2), pages -127.
    7. Travis J. Lybbert & Christopher B. Barrett, 2011. "Risk‐Taking Behavior In The Presence Of Nonconvex Asset Dynamics," Economic Inquiry, Western Economic Association International, vol. 49(4), pages 982-988, October.
    8. Dercon, Stefan, 2004. "Growth and shocks: evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 74(2), pages 309-329, August.
    9. Fengxia Dong & Allen Featherstone, 2006. "Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 4(1), pages 57-75.
    10. Jalan, Jyotsna & Ravallion, Martin, 1999. "Are the poor less well insured? Evidence on vulnerability to income risk in rural China," Journal of Development Economics, Elsevier, vol. 58(1), pages 61-81, February.
    11. Francisca Antman & David McKenzie, 2007. "Poverty traps and nonlinear income dynamics with measurement error and individual heterogeneity," Journal of Development Studies, Taylor & Francis Journals, vol. 43(6), pages 1057-1083.
    12. Andy McKay & Emilie Perge, 2013. "How Strong is the Evidence for the Existence of Poverty Traps? A Multicountry Assessment," Journal of Development Studies, Taylor & Francis Journals, vol. 49(7), pages 877-897, July.
    13. Carter, Michael R. & Little, Peter D. & Mogues, Tewodaj & Negatu, Workneh, 2007. "Poverty Traps and Natural Disasters in Ethiopia and Honduras," World Development, Elsevier, vol. 35(5), pages 835-856, May.
    14. Fafchamps, Marcel, 2010. "Vulnerability, risk management and agricultural development," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 5(1), September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuan, Yan & Xu, Lihe, 2015. "Are poor able to access the informal credit market? Evidence from rural households in China," China Economic Review, Elsevier, vol. 33(C), pages 232-246.
    2. Luo, Jay, 2019. "Poverty alleviation research in rural China: Three decades and counting," SocArXiv gmuav, Center for Open Science.
    3. Nan Zhou & Wenli Cheng & Longyao Zhang, 2022. "Stepping Stone: The Logic of Financial Inclusion through Microcredit in Rural China," Monash Economics Working Papers 2022-15, Monash University, Department of Economics.
    4. Hang, Yuan, 2017. "Is There a Poverty Trap of multiple Dynamic Equilibria? The Analysis on Data of Rural Fixed Observation Point from 2004 to 2012," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 257264, Agricultural and Applied Economics Association.
    5. Linjing Ren & Xiaojun Yang, 2023. "Adoption and shift of water-saving strategies to policy shock: based on social-ecological system analysis," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 37(10), pages 4015-4037, August.
    6. Jing You & Sangui Wang & Laurence Roope, 2018. "Intertemporal deprivation in rural china: income and nutrition," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(1), pages 61-101, March.
    7. Lijuan Xu & Abbas Ali Chandio & Jingyi Wang & Yuansheng Jiang, 2022. "Does Farmland Tenancy Improve Household Asset Allocation? Evidence from Rural China," Land, MDPI, vol. 12(1), pages 1-22, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Katharina Lehmann-Uschner & Kati Krähnert, 2018. "When Shocks Become Persistent: Household-Level Asset Growth in the Aftermath of an Extreme Weather Event," Discussion Papers of DIW Berlin 1759, DIW Berlin, German Institute for Economic Research.
    2. Giesbert, Lena & Schindler, Kati, 2012. "Assets, Shocks, and Poverty Traps in Rural Mozambique," World Development, Elsevier, vol. 40(8), pages 1594-1609.
    3. Jakobsen, Kristian Thor, 2012. "In the Eye of the Storm—The Welfare Impacts of a Hurricane," World Development, Elsevier, vol. 40(12), pages 2578-2589.
    4. Dylan Fitz & Shyam Gouri Suresh, 2021. "Poverty traps across levels of aggregation," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 16(4), pages 909-953, October.
    5. Li Zhou & Jie Sun & Wuyang Hu & Yu Zhang, 2023. "Asset Smoothing and Consumption Smoothing: Disaster‐coping Strategies in Noncontiguous and Contiguous Destitute Areas," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(2), pages 223-250, March.
    6. Barnett, Barry J. & Barrett, Christopher B. & Skees, Jerry R., 2008. "Poverty Traps and Index-Based Risk Transfer Products," World Development, Elsevier, vol. 36(10), pages 1766-1785, October.
    7. Letta, Marco & Montalbano, Pierluigi & Tol, Richard S.J., 2018. "Temperature shocks, short-term growth and poverty thresholds: Evidence from rural Tanzania," World Development, Elsevier, vol. 112(C), pages 13-32.
    8. Muntaha Rakib & Julia Anna Matz, 2016. "The Impact of Shocks on Gender-differentiated Asset Dynamics in Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 52(3), pages 377-395, March.
    9. Haider, Hamza, "undated". "Asset Management & Coping Strategies in Burkina Faso," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259956, Agricultural and Applied Economics Association.
    10. Carter, Michael R. & Lybbert, Travis J., 2012. "Consumption versus asset smoothing: testing the implications of poverty trap theory in Burkina Faso," Journal of Development Economics, Elsevier, vol. 99(2), pages 255-264.
    11. Emiliano Magrini & Pierluigi Montalbano, 2012. "Trade openness and vulnerability to poverty: Vietnam in the long-run (1992-2008)," Working Paper Series 3512, Department of Economics, University of Sussex Business School.
    12. Ana María Ibañez & Andrés Moya, 2010. "Do Conflicts Create Poverty Traps? Asset Losses and Recovery for Displaced Households in Colombia," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 137-172, National Bureau of Economic Research, Inc.
    13. Mburu, Samuel & Kaiser, Micha & Sousa-Poza, Alfonso, 2017. "Livestock asset dynamics among pastoralists in Northern Kenya," Hohenheim Discussion Papers in Business, Economics and Social Sciences 25-2017, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    14. World Bank, 2010. "Improving Water Management in Rainfed Agriculture : Issues and Options in Water-Constrained Production Systems," World Bank Publications - Reports 13028, The World Bank Group.
    15. Dillon, Andrew & Quiñones, Esteban J., 2010. "Asset dynamics in Northern Nigeria," IFPRI discussion papers 1049, International Food Policy Research Institute (IFPRI).
    16. Hansen, James & Hellin, Jon & Rosenstock, Todd & Fisher, Eleanor & Cairns, Jill & Stirling, Clare & Lamanna, Christine & van Etten, Jacob & Rose, Alison & Campbell, Bruce, 2019. "Climate risk management and rural poverty reduction," Agricultural Systems, Elsevier, vol. 172(C), pages 28-46.
    17. Renata Baborska & Emilio Hernandez & Emiliano Magrini & Cristian Morales-Opazo, 2020. "The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 10(2), pages 1-18.
    18. Van Campenhout, Bjorn & Dercon, Stefan, 2012. "Nonlinear dynamics of livestock assets: Evidence from Ethiopia," IFPRI discussion papers 1215, International Food Policy Research Institute (IFPRI).
    19. Hang, Yuan, 2017. "Is There a Poverty Trap of multiple Dynamic Equilibria? The Analysis on Data of Rural Fixed Observation Point from 2004 to 2012," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 257264, Agricultural and Applied Economics Association.
    20. Thiede, Brian C., 2014. "Rainfall Shocks and Within-Community Wealth Inequality: Evidence from Rural Ethiopia," World Development, Elsevier, vol. 64(C), pages 181-193.

    More about this item

    Keywords

    Risk; Asset dynamics; Poverty trap; Rural China;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:29:y:2014:i:c:p:27-45. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.