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Externalities in rural development - evidence for China


  • Ravallion, Martin


The author tests for external effects of local economic activity on consumption and income growth at the farm-household level using panel data from four provinces of post-reform rural China. The tests allow for non-stationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from under-investment in certain externality-generating activities, of which agricultural development emerges as the most important.

Suggested Citation

  • Ravallion, Martin, 2002. "Externalities in rural development - evidence for China," Policy Research Working Paper Series 2879, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2879

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    References listed on IDEAS

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    Cited by:

    1. Barrett, Christopher B. & Swallow, Brent M., 2006. "Fractal poverty traps," World Development, Elsevier, vol. 34(1), pages 1-15, January.
    2. Giles, John, 2006. "Is life more risky in the open? Household risk-coping and the opening of China's labor markets," Journal of Development Economics, Elsevier, vol. 81(1), pages 25-60, October.
    3. Farrow, Andrew & Opondo, Chris & Rao, KPC & Tenywa, Moses & Njeru, Rose & Kashaija, Imelda & Kamugisha, Rick & Ramazani, Michel & Nkonya, Ephraim & Kayiranga, Didace & Lubanga, Lunze & Nabahungu, Leon, 2013. "Selecting sites to prove the concept of IAR4D in the Lake Kivu Pilot Learning Site," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 8(3), September.
    4. Zhu, Nong & Luo, Xubei, 2006. "Nonfarm activity and rural income inequality : a case study of two provinces in China," Policy Research Working Paper Series 3811, The World Bank.
    5. Valdés, Alberto & Foster, William, 2010. "Reflections on the Role of Agriculture in Pro-Poor Growth," World Development, Elsevier, vol. 38(10), pages 1362-1374, October.
    6. Zhu, Nong & Luo, Xubei, 2008. "The impact of remittances on rural poverty and inequality in China," Policy Research Working Paper Series 4637, The World Bank.
    7. Kuyvenhoven, Arie, 2004. "Creating an enabling environment: policy conditions for less-favored areas," Food Policy, Elsevier, vol. 29(4), pages 407-429, August.
    8. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
    9. 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.


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