Rural Poverty in Southeast Asia: Issues, Policies, and Challenges

Economic growth among Southeast Asian countries during the last 25 years has averaged at five percent per year and has been accompanied by a decline in the relative importance of agriculture in the national output and employment. The response of poverty to this growth and structural transformation has been equally remarkable, with the headcount ratio in 2002 registering a more than 50 percent drop from the 1990 figure. Although impressive, Southeast Asia's overall record in growth and poverty reduction has not been uniform, as evident in the experiences of countries like Indonesia, Philippines and East Timor, as well as the transition economies, namely, Cambodia, Lao PDR, Myanmar and Vietnam. In these countries, liberalizing agricultural trade, combined with public investment in productivity-enhancing support services, would advance the interests of the poor. To contribute in the efforts to strengthen the continuing war on poverty especially in these transition economies, the paper highlights the lessons learned in poverty reduction so as to identify more clearly the policy options for achieving the Millenium Development Goals in the Region. One powerful lesson that has emerged in tackling poverty and food insecurity concerns the use of policy, investment and institutional reforms to enable the rural poor to partake of the windfall from efficient domestic markets and the improved access to technology, infrastructure and education. The success stories would show that the main push to these efficiency-enhancing reforms has come, not from globalization nor agricultural policy but from the internal realization that the country and its citizens were the major beneficiaries of the reform. Another important challenge facing countries in the Region is to find the appropriate mix of policies and institutions that would maximize the enormous benefits from globalization while protecting against its risks and pitfalls. Lastly, given that the investment requirements for poverty reduction are beyond the resources of low-income countries, the paper identifies the critical role of the development assistance community.