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Rural Poverty: Old Challenges in New Contexts

  • Stefan Dercon

Poverty is still a predominantly rural phenomenon. However, the context of rural poverty is rapidly changing across the world, with high growth in some economies and stagnation in others. Furthermore, increased openness in many economies has affected the necessity of agricultural growth for rural poverty reduction. This paper argues that rural poverty alleviation has to be firmly put in the context of rural-urban interactions, and the broader contexts of trade, growth and poverty reduction. In terms of research, it is important to revisit the `old` question related to sectoral land urban-rural linkages: how does development and poverty reduction come about if most of the poor live in rural areas, dependent on agriculture? What is the role of agricultural development in this respect? We conclude that in closed economies, there are strong arguments to suggest that pro-poor growth has to start in agriculture, but in an open economy, this necessity disappears. But this also means that we should particularly pay attention to those settings and contexts in which rural development is the only hope, such as landlocked, resource poor economies, which are typically also countries with relatively low potential for agriculture. In other settings, agricultural growth is just one of many options for shared growth and poverty reduction. When focusing specifically on rural issues, we should focus on situations in which growth may not be able to unlock the potential of the poor, effectively trapping them in poverty. We consider three examples of poverty traps, related to credit, risk and spatial effects. Especially the latter needs more attention in research and policy analysis. Data that can document the nature of rural-urban linkages, internal migration and other forces that can unlock spatial poverty traps are requried to guide our understanding and policy responses.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number GPRG-WPS-072.

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Date of creation: 01 Mar 2007
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Handle: RePEc:oxf:wpaper:gprg-wps-072
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