IDEAS home Printed from https://ideas.repec.org/p/ags/iaae18/277278.html
   My bibliography  Save this paper

The Effect of the Sectoral Composition of Economic Growth on Rural and Urban Poverty

Author

Listed:
  • Benfica, R.
  • Henderson, H.

Abstract

We examine the relationship between the sectoral composition of economic growth and the rural-urban composition of poverty. To this end, we use a new cross-country panel dataset consisting of 146 rural and urban poverty spells for 71 low- and middle-income countries. We find that rural (urban) poverty is highly responsive to agricultural (non-agricultural) productivity growth. The effect of agricultural productivity growth on rural poverty is particularly strong for countries with little dependence on natural resources. We also find that growth in the share of employment in the non-agricultural sector (i.e., structural transformation) reduces rural poverty, most notably for countries with a low initial level of development. These findings are robust to changes in key assumptions, including using alternative poverty lines. Finally, we use our estimates to examine the historical contribution of different sources of economic growth to rural and urban poverty reduction. Acknowledgement : We acknowledge the International Fund for Agricultural Development for supporting this research.

Suggested Citation

  • Benfica, R. & Henderson, H., 2018. "The Effect of the Sectoral Composition of Economic Growth on Rural and Urban Poverty," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277278, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:277278
    DOI: 10.22004/ag.econ.277278
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/277278/files/1533.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.277278?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gaurav Datt & Martin Ravallion & Rinku Murgai, 2016. "Growth, Urbanization and Poverty Reduction in India," Monash Economics Working Papers 09-16, Monash University, Department of Economics.
    2. Ravallion, Martin & Chen, Shaohua, 1997. "What Can New Survey Data Tell Us about Recent Changes in Distribution and Poverty?," The World Bank Economic Review, World Bank, vol. 11(2), pages 357-382, May.
    3. Suryahadi, Asep & Suryadarma, Daniel & Sumarto, Sudarno, 2009. "The effects of location and sectoral components of economic growth on poverty: Evidence from Indonesia," Journal of Development Economics, Elsevier, vol. 89(1), pages 109-117, May.
    4. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, February.
    5. Rati Ram, 2011. "Growth elasticity of poverty: direct estimates from recent data," Applied Economics, Taylor & Francis Journals, vol. 43(19), pages 2433-2440.
    6. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    7. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September.
    8. Martin Ravallion & Shaohua Chen & Prem Sangraula, 2007. "New Evidence on the Urbanization of Global Poverty," Population and Development Review, The Population Council, Inc., vol. 33(4), pages 667-701, December.
    9. James E. Foster & Miguel Székely, 2008. "Is Economic Growth Good For The Poor? Tracking Low Incomes Using General Means," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1143-1172, November.
    10. Loayza, Norman V. & Raddatz, Claudio, 2010. "The composition of growth matters for poverty alleviation," Journal of Development Economics, Elsevier, vol. 93(1), pages 137-151, September.
    11. Angus Deaton, 2005. "ERRATUM: Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 395-395, May.
    12. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    13. Ravallion, Martin & Datt, Gaurav, 1996. "How Important to India's Poor Is the Sectoral Composition of Economic Growth?," The World Bank Economic Review, World Bank, vol. 10(1), pages 1-25, January.
    14. Stefan Dercon, 2009. "Rural Poverty: Old Challenges in New Contexts," The World Bank Research Observer, World Bank, vol. 24(1), pages 1-28, April.
    15. Ravallion, Martin & Chen, Shaohua, 2007. "China's (uneven) progress against poverty," Journal of Development Economics, Elsevier, vol. 82(1), pages 1-42, January.
    16. Bezemer, Dirk & Headey, Derek, 2008. "Agriculture, Development, and Urban Bias," World Development, Elsevier, vol. 36(8), pages 1342-1364, August.
    17. Misselhorn, Mark & Klasen, Stephan, 2006. "Determinants of the Growth Semi-Elasticity of Poverty Reduction," Proceedings of the German Development Economics Conference, Berlin 2006 15, Verein für Socialpolitik, Research Committee Development Economics.
    18. Montalvo, Jose G. & Ravallion, Martin, 2010. "The pattern of growth and poverty reduction in China," Journal of Comparative Economics, Elsevier, vol. 38(1), pages 2-16, March.
    19. Alain de Janvry & Elisabeth Sadoulet, 2010. "Agricultural Growth and Poverty Reduction: Additional Evidence," The World Bank Research Observer, World Bank, vol. 25(1), pages 1-20, February.
    20. Pedro Cunha Neves & Sandra Tavares Silva, 2010. "Inequality and Growth: Uncovering the main conclusions from the empirics," FEP Working Papers 381, Universidade do Porto, Faculdade de Economia do Porto.
    21. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447.
    22. Martin Ravallion, 2003. "Measuring Aggregate Welfare in Developing Countries: How Well Do National Accounts and Surveys Agree?," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 645-652, August.
    23. Augustin Kwasi Fosu, 2009. "Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 726-745.
    24. Gaurav Datt & Martin Ravallion, 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.
    25. Christiaensen, Luc & Demery, Lionel & Kuhl, Jesper, 2011. "The (evolving) role of agriculture in poverty reduction--An empirical perspective," Journal of Development Economics, Elsevier, vol. 96(2), pages 239-254, November.
    26. Kalwij, Adriaan & Verschoor, Arjan, 2007. "Not by growth alone: The role of the distribution of income in regional diversity in poverty reduction," European Economic Review, Elsevier, vol. 51(4), pages 805-829, May.
    27. Ferreira, Francisco H.G. & Leite, Phillippe G. & Ravallion, Martin, 2010. "Poverty reduction without economic growth?: Explaining Brazil's poverty dynamics, 1985-2004," Journal of Development Economics, Elsevier, vol. 93(1), pages 20-36, September.
    28. Angus Deaton & Bettina Aten, 2017. "Trying to Understand the PPPs in ICP 2011: Why Are the Results So Different?," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(1), pages 243-264, January.
    29. Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 80(1), pages 198-227, June.
    30. Dustin Chambers & Shatakshee Dhongde, 2011. "A Non‐Parametric Measure Of Poverty Elasticity," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 683-703, December.
    31. 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.
    32. Pedro Cunha Neves & Sandra Maria Tavares Silva, 2014. "Inequality and Growth: Uncovering the Main Conclusions from the Empirics," Journal of Development Studies, Taylor & Francis Journals, vol. 50(1), pages 1-21, January.
    33. Timothy Besley & Robin Burgess, 2003. "Halving Global Poverty," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 3-22, Summer.
    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. Erumban, Abdul A. & de Vries, Gaaitzen J., 2024. "Structural change and poverty reduction in developing economies," World Development, Elsevier, vol. 181(C).
    2. Benfica, Rui, 2022. "Agricultural R&D investments and development goals in sub-Saharan Africa: Assessing prioritisation of value chains in Senegal," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(2), June.
    3. Angel Alcantara & Stephanie M. Brewer & James J. Jozefowicz, 2023. "Rural-Urban Differences in Poverty: An Analysis of Pennsylvania Counties," International Journal of Economics and Financial Issues, Econjournals, vol. 13(5), pages 1-9, September.

    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. Benfica, R. & Henderson, H., 2018. "IFAD RESEARCH SERIES 23 - The effect of the sectoral composition of economic growth on rural and urban poverty," IFAD Research Series 280072, International Fund for Agricultural Development (IFAD).
    2. Tarlok Singh, 2022. "Economic growth and the state of poverty in India: sectoral and provincial perspectives," Economic Change and Restructuring, Springer, vol. 55(3), pages 1251-1302, August.
    3. Facundo Alvaredo & Leonardo Gasparini, 2013. "Recent Trends in Inequality and Poverty in Developing Countries," CEDLAS, Working Papers 0151, CEDLAS, Universidad Nacional de La Plata.
    4. Bluhm, Richard & de Crombrugghe, Denis & Szirmai, Adam, 2018. "Poverty accounting," European Economic Review, Elsevier, vol. 104(C), pages 237-255.
    5. Erumban, Abdul A. & de Vries, Gaaitzen J., 2024. "Structural change and poverty reduction in developing economies," World Development, Elsevier, vol. 181(C).
    6. Nobuhiko Fuwa & Arsenio M. Balisacan & Fabrizio Bresciani, 2015. "In Search of a Strategy for Making Growth More Pro-Poor in the Philippines," Asian Economic Papers, MIT Press, vol. 14(1), pages 202-226, Winter/Sp.
    7. Christiaensen, Luc & Todo, Yasuyuki, 2014. "Poverty Reduction During the Rural–Urban Transformation – The Role of the Missing Middle," World Development, Elsevier, vol. 63(C), pages 43-58.
    8. Cerra,Valerie & Lama,Ruy & Loayza,Norman V., 2021. "Links between Growth, Inequality, and Poverty : A Survey," Policy Research Working Paper Series 9603, The World Bank.
    9. Christiaensen, Luc & Demery, Lionel & Kuhl, Jesper, 2011. "The (evolving) role of agriculture in poverty reduction--An empirical perspective," Journal of Development Economics, Elsevier, vol. 96(2), pages 239-254, November.
    10. Gustavo Canavire‐Bacarreza & Michael Jetter & Marcos Robles, 2018. "When Does Economic Growth Reduce Poverty and Strengthen the Middle Class? A State‐Level, Sector‐Specific Analysis of Peru," Southern Economic Journal, John Wiley & Sons, vol. 84(4), pages 1067-1087, April.
    11. Loayza, Norman V. & Raddatz, Claudio, 2010. "The composition of growth matters for poverty alleviation," Journal of Development Economics, Elsevier, vol. 93(1), pages 137-151, September.
    12. Luc Christiaensen & Lionel Demery & Jesper Kühl, 2010. "The (Evolving) Role of Agriculture in Poverty Reduction," WIDER Working Paper Series wp-2010-036, World Institute for Development Economic Research (UNU-WIDER).
    13. Christiaensen, Luc & Demery, Lionel & Kuhl, Jesper, 2011. "The (evolving) role of agriculture in poverty reduction--An empirical perspective," Journal of Development Economics, Elsevier, vol. 96(2), pages 239-254, November.
    14. Victor GAMARRA ECHENIQUE, 2018. "Sectoral Composition Of Growth And Poverty Reduction In Peru: A Regional Approach (2001-2016)," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 18(2), pages 23-42.
    15. Montalvo, Jose G. & Ravallion, Martin, 2010. "The pattern of growth and poverty reduction in China," Journal of Comparative Economics, Elsevier, vol. 38(1), pages 2-16, March.
    16. Martin Ravallion, 2011. "A Comparative Perspective on Poverty Reduction in Brazil, China, and India," The World Bank Research Observer, World Bank, vol. 26(1), pages 71-104, February.
    17. Bluhm R & Crombrugghe D.P.I. de & Szirmai A., 2013. "The pace of poverty reduction - A fractional response approach," MERIT Working Papers 2013-051, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    18. Ligon, Ethan & Sadoulet, Elisabeth, 2018. "Estimating the Relative Benefits of Agricultural Growth on the Distribution of Expenditures," World Development, Elsevier, vol. 109(C), pages 417-428.
    19. Vincenzo Lombardo, 2011. "Growth and Inequality Effects on Poverty Reduction in Italy," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 241-280.
    20. Ferreira, Francisco H.G. & Leite, Phillippe G. & Ravallion, Martin, 2010. "Poverty reduction without economic growth?: Explaining Brazil's poverty dynamics, 1985-2004," Journal of Development Economics, Elsevier, vol. 93(1), pages 20-36, September.

    More about this item

    Keywords

    Food Security and Poverty;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ags:iaae18:277278. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    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.