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Pathways Out of Poverty During an Economic Crisis: An Empirical Assessment of Rural Indonesia

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  • Neil McCulloch
  • C. Peter Timmer
  • Julian Weisbrod

Abstract

Most poor people in developing countries still live in rural areas and are primarily engaged in low productivity farming activities. Thus pathways out of poverty are likely to be strongly connected to productivity increases in the rural economy, whether they are realised in farming, rural non-farm enterprises or via rural-urban migration. We use cross-sectional data from the Central Statistical Board (BPS) for 1993 and 2002, as well as a panel data set from the Indonesia Family Life Survey (IFLS) for 1993 and 2000, to show which pathways out of poverty were most successful over this period. Our findings suggest that increased engagement of farmers in rural non-farm enterprises is an important route out of rural poverty, but that most of the rural agricultural poor that exit poverty still do so while remaining rural and agricultural. Thus changes in agricultural prices, wages and productivity still play a critical role in moving people out of poverty.

Suggested Citation

  • Neil McCulloch & C. Peter Timmer & Julian Weisbrod, 2007. "Pathways Out of Poverty During an Economic Crisis: An Empirical Assessment of Rural Indonesia," Working Papers 115, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:115
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    Cited by:

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    2. World Bank, . "Land Reform, Rural Development, and Poverty in the Philippines : Revisiting the Agenda," World Bank Other Operational Studies, The World Bank, number 18545, March.
    3. Khandker, Shahidur R. & Samad, Hussain A. & Ali, Rubaba, 2013. "Does access to finance matter in microenterprise growth ? evidence from Bangladesh," Policy Research Working Paper Series 6333, The World Bank.
    4. Moeis, Faizal Rahmanto & Dartanto, Teguh & Moeis, Jossy Prananta & Ikhsan, Mohamad, 2020. "A longitudinal study of agriculture households in Indonesia: The effect of land and labor mobility on welfare and poverty dynamics," World Development Perspectives, Elsevier, vol. 20(C).
    5. Renate Ohr, 2009. "European Monetary Union at Ten: Had the German Maastricht Critics Been Wrong?," Departmental Discussion Papers 141, University of Goettingen, Department of Economics.
    6. Corinna Ahlfeld, 2009. "The scapegoat of heterogeneity - How fragmentation influences political decisionmaking," Departmental Discussion Papers 143, University of Goettingen, Department of Economics.
    7. Luc Christiaensen & Joachim Weerdt & Yasuyuki Todo, 2013. "Urbanization and poverty reduction: the role of rural diversification and secondary towns," Agricultural Economics, International Association of Agricultural Economists, vol. 44(4-5), pages 435-447, July.
    8. Andy Sumner & Peter Edward, 2013. "From Low Income, High Poverty to High-Income, No Poverty? An Optimistic View of the Long-Run Evolution of Poverty in Indonesia By International Poverty Lines, 1984–2030," Working Papers in Economics and Development Studies (WoPEDS) 201310, Department of Economics, Padjadjaran University, revised Jun 2013.
    9. Ahmed, Mansur & Goodwin, Barry, "undated". "Agricultural Mechanization and Non-Farm Labor Supply of Farm Households: Evidence from Bangladesh," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236131, Agricultural and Applied Economics Association.
    10. 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.
    11. McCarthy, John F. & Gillespie, Piers & Zen, Zahari, 2012. "Swimming Upstream: Local Indonesian Production Networks in “Globalized” Palm Oil Production," World Development, Elsevier, vol. 40(3), pages 555-569.
    12. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    13. World Bank, . "Tackling Poverty in Northern Ghana," World Bank Other Operational Studies, The World Bank, number 2755, March.
    14. 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.
    15. Yamamoto, Yuki & Shigetomi, Yosuke & Ishimura, Yuichi & Hattori, Mitsuru, 2019. "Forest change and agricultural productivity: Evidence from Indonesia," World Development, Elsevier, vol. 114(C), pages 196-207.

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    More about this item

    Keywords

    Poverty dynamics; non-farm sector; micro-growth regression;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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