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The Role of Infrastructure in Mitigating Poverty Dynamics:The Case of an Irrigation Project in Sri Lanka

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  • Sawada, Yasuyuki
  • Shoji, Masahiro
  • Sugawara, Shinya
  • Shinkai, Naoko

Abstract

While it is known that access to physical infrastructure enhances household welfare, there are very few micro-econometric studies that analyze its role in mitigating chronic and transient poverty. This paper aims to bridge this gap in the existing literature by evaluating the impact of a large-scale irrigation infrastructure project implemented in Sri Lanka. It identifies the treatment effect of irrigation access by exploiting a natural experimental situation where the government used lotteries to randomly distribute irrigated plots. We extend the seasonal consumption smoothing model of Paxson (1993) by introducing endogenous credit constraints. By using unique household level monthly panel data over a period of two years, it is shown that the average income increases, and the probability of binding credit constraint declines with irrigation accessibility through which transient poverty is mitigated. These empirical results suggest that irrigation infrastructure has a positive impact on reducing both chronic and transient poverty directly and indirectly by improving income and relaxing credit constraints. The structural estimation results support the validity of our theoretical framework.

Suggested Citation

  • Sawada, Yasuyuki & Shoji, Masahiro & Sugawara, Shinya & Shinkai, Naoko, 2010. "The Role of Infrastructure in Mitigating Poverty Dynamics:The Case of an Irrigation Project in Sri Lanka," Working Papers 4, JICA Research Institute.
  • Handle: RePEc:jic:wpaper:4
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    Cited by:

    1. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki & Ueyama, Mika, 2012. "Social Capital Formation and Credit Access: Evidence from Sri Lanka," World Development, Elsevier, vol. 40(12), pages 2522-2536.
    2. Teguh Dartanto & Nurkholis, 2013. "The determinants of poverty dynamics in Indonesia: evidence from panel data," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(1), pages 61-84, April.
    3. Dartanto, Teguh & Otsubo, Shigeru, 2016. "Intrageneration Poverty Dynamics in Indonesia: Households’ Welfare Mobility Before, During, and After the Asian Financial Crisis," Working Papers 117, JICA Research Institute.
    4. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki, 2010. "Motives behind Community Participation," Working Papers 16, JICA Research Institute.
    5. Sawada, Yasuyuki, 2015. "The Impacts of Infrastructure in Development: A Selective Survey," ADBI Working Papers 511, Asian Development Bank Institute.
    6. Yasuyuki Sawada & Ryuji Kasahara & Keitaro Aoyagi & Masahiro Shoji & Mika Ueyama, 2013. "Modes of Collective Action in Village Economies: Evidence from Natural and Artefactual Field Experiments in a Developing Country," Asian Development Review, MIT Press, vol. 30(1), pages 31-51, March.
    7. Sonali Senaratna Sellamuttu & Takeshi Aida & Ryuji Kasahara & Yasuyuki Sawada & Deeptha Wijerathna, 2014. "How Access to Irrigation Influences Poverty and Livelihoods: A Case Study from Sri Lanka," Journal of Development Studies, Taylor & Francis Journals, vol. 50(5), pages 748-768, May.
    8. Teguh, Dartanto & Nurkholis, Nurkholis, 2011. "Finding out of the Determinants of Poverty Dynamics in Indonesia: Evidence from Panel Data," MPRA Paper 41185, University Library of Munich, Germany.
    9. Senaratna Sellamuttu, Sonali, 2013. "How access to irrigation influences poverty and livelihoods: a case study from Sri Lanka. Impact assessment of infrastructure projects on poverty reduction," IWMI Working Papers H045795, International Water Management Institute.
    10. Kurosaki, Takashi, 2012. "Urban Transportation Infrastructure and Poverty Reduction: Delhi Metro's Impact on the Cycle Rickshaw Rental Market," PRIMCED Discussion Paper Series 24, Institute of Economic Research, Hitotsubashi University.
    11. Sapkota, Jeet Bahadur, 2014. "Access to Infrastructure and Human Development:Cross-Country Evidence," Working Papers 70, JICA Research Institute.
    12. Aoyagi, Keitaro & Sawada, Yasuyuki & Shoji, Masahiro, 2014. "Does Infrastructure Facilitate Social Capital Accumulation? Evidence from Natural and Artefactual Field Experiments in a Developing Country," Working Papers 65, JICA Research Institute.
    13. Aida, Takeshi, 2011. "Social Capital as an Instrument for Common Pool Resource Management:A Case Study of Irrigation Management in Sri Lanka," Working Papers 33, JICA Research Institute.
    14. Majumder, Rajarshi, 2012. "Removing poverty and inequality in India: the role of infrastructure," MPRA Paper 40941, University Library of Munich, Germany.

    More about this item

    Keywords

    Poverty Reduction ; Role of Infrastructure ; Monthly Panel Data;

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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