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How important to India's poor is the urban - rural composition of growth?

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  • Ravaillon, Martin
  • Datt, Gaurav

Abstract

Views differ on how much India's poor have shared in the growth and contraction in the country's average standard of living since independence. Some have argued that the rural growth that accompanied the green revolution in the 1970s and 1980s brought few gains to the poor in the rural sector, while others have viewed agricultural growth as the key to rural poverty reduction. Views have also differed on how much urban growth has benefited the poor. The authors used 33 household surveys spanning 1951-1991 to examine the relative importance to India's poor of both urban and rural consumption growth. Among other things, they tested for spillover effects between sectors: does urban growth have the same effects on the rural distribution of consumption as rural growth has on urban distribution? Urban growth reduced poverty, but adverse distribution effects within the urban sector reduced the gains to the urban poor, and urban growth had no significant effect on rural distribution. Rural growth was distribution-neutral within the rural sector and so brought sizable absolute gains to the rural poor. Rural growth also had pro-poor distributional effects on urban poverty. Identifying the nature of these intra- and inter-sectoral effects reinforces the importance of rural growth to national poverty reduction. Future progress in fighting poverty in India will depend on both the rate of rural economic growth and the country's success in switching to a more pro-poor process of growth.

Suggested Citation

  • Ravaillon, Martin & Datt, Gaurav, 1994. "How important to India's poor is the urban - rural composition of growth?," Policy Research Working Paper Series 1399, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1399
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    References listed on IDEAS

    as
    1. Ravallion, Martin & Datt, Gaurav, 1995. "Growth and poverty in rural India," Policy Research Working Paper Series 1405, The World Bank.
    2. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    3. Anand, Sudhir & Kanbur, S M R, 1985. "Poverty under the Kuznets Process," Economic Journal, Royal Economic Society, vol. 95(380a), pages 42-50, Supplemen.
    4. Ravallion, Martin & Huppi, Monika, 1991. "Measuring Changes in Poverty: A Methodological Case Study of Indonesia during an Adjustment Period," World Bank Economic Review, World Bank Group, vol. 5(1), pages 57-82, January.
    5. John H. Cochrane, 1994. "Permanent and Transitory Components of GNP and Stock Prices," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 241-265.
    6. Sudhir Anand & Martin Ravallion, 1993. "Human Development in Poor Countries: On the Role of Private Incomes and Public Services," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 133-150, Winter.
    7. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
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    Cited by:

    1. Nguezet, Paul Martin Dontsop & Diagne, Aliou & Okoruwa, Victor Olusegun & Ojehomon, Vivian, 0. "Impact of Improved Rice Technology (NERICA varieties) on Income and Poverty among Rice Farming Households in Nigeria: A Local Average Treatment Effect (LATE) Approach," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 50.
    2. Andrew McKay & Sarmistha Pal, 2004. "Relationships between Household Consumption and Inequality in the Indian States," Journal of Development Studies, Taylor & Francis Journals, vol. 40(5), pages 65-90.
    3. Mendola, Mariapia, 2007. "Agricultural technology adoption and poverty reduction: A propensity-score matching analysis for rural Bangladesh," Food Policy, Elsevier, vol. 32(3), pages 372-393, June.
    4. Mariapia Mendola, 2003. "Agricultural Technology and Povertry Reduction: A Micro-Level Analysis of Causal Effects," Development Working Papers 179, Centro Studi Luca d'Agliano, University of Milano.
    5. Ravallion, Martin & Datt, Gaurav, 1995. "Growth and poverty in rural India," Policy Research Working Paper Series 1405, The World Bank.
    6. Rana Hasan & M.G. Quibria & Yangseon Kim, 2003. "Poverty and Economic Freedom: Evidence from Cross-Country Data," Economics Study Area Working Papers 60, East-West Center, Economics Study Area.
    7. Kerr, John M., 1996. "Sustainable development of rainfed agriculture in India:," EPTD discussion papers 20, International Food Policy Research Institute (IFPRI).
    8. Umali-Deininger, Dina & Sur, Mona & Deininger, Klaus W., 2005. "Foodgrain Subsidies in India: Are they Reaching the Poor?," 2005 Annual meeting, July 24-27, Providence, RI 19486, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. World Bank, 2001. "India - Improving Household Food and Nutrition Security : Achievements and the Challenges Ahead, Volume 1. Main Report," World Bank Other Operational Studies 15516, The World Bank.
    10. Suryanarayana, M.H., 2002. "Poverty in India: Misspecified Policies and Estimates," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    11. Ademar Ribeiro Romeiro, 2001. "Développement économique et agriculture familiale au Brésil," Revue Tiers Monde, Programme National Persée, vol. 42(167), pages 633-655.

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