The Role of Agricultural Development in Poverty Reduction

Transcription

1 The Role of Agricultural Development in Poverty Reduction Luc Christiaensen, UNU-WIDER Presentation at the OECD Global Forum on Agriculture, November, 2010, Paris

2 Dual Role of Agriculture Sectoral - securing global food supply Commodity focus in the aggregate World food supply struggles to keep up with demand Development engine for shared growth Focus on individual well-being Longstanding divergent views

3 Central thesis Pressure on global food supply opens up important opportunities for smallholder driven agriculture as trigger of pro-poor growth in low income countries

4 A simple accounting framework Poverty Reduction Decomposed (1) GDP growth (dy/y) Elasticity ( ) Poverty reduction (dp/p) dp/p ε*dy/y Two components: participation and growth component

5 Poverty reduction decomposed by sector (2) Direct effect Growth component Ag Growth Participation and share components y ai Indirect effect Poverty Reduction Direct effect Nonag Growth Ynat P t p t a,t s a,t-1 y a,t (y n,at-k ) + n,t s n,t-1 y nt (y a,t-k ) participation share direct and indirect growth participation share direct and indirect growth

6 What do the numbers say?

7 Emerging insights on AG growth potential Ag grows slower (on avg by 1.6 %points bw ) Not due to inherently slow productivity growth, but migration Engel s Law globally agricultural sector will grow slower Nag GDP growth > Ag; Ag Labor prod growth > Nagg Ag Nag Ag Nag Sub-Saharan Africa 2.4 Labor Productivity growth (%) Employment growth (%) high income elasticity for non-staple food provide opportunities (Chile, SSA) if trade opportunities, but even food (Brazil) SSA - recovery in ag TFP in SSA & higher agricultural commodity prices provide opportunities, though many challenges remain, Total 3.1

8 Linkage effects decline as countries develop, but still relevant in African low income countries Tradability of food food markets well integrated (e.g. Brazil-China trade), but African food markets still poorly integrated GMM estimates intersectoral linkages middle inc countries: no overall effect, but local effects (Cerrado) low inc countries: pos feedback, but no longer exceeding reverse effects low inc SSA: still larger linkage effects from agriculture to non-agriculture in SSA ( see also HSW, 2009)

9 Participation effect: Three reasons for sectoral differences Poor live in rural areas & and still earn a substantial portion of income from agriculture (& related) activities Differences in labor intensity across sectors Differences in inequality in distribution of relevant assets (land in agriculture and capital in non-agriculture) Estimating the participation effect p a *s a *y a + n *s n *y n

10 On average, growth from agriculture more poverty reducing Poverty $1-day $2-day Country fixed effects estimates HC PG2 HC PG2 Agric growth/cap -7.08*** -5.9** -4.47*** -4.01*** Agric growth/cap*gini t Non-Agric growth/cap -1.78*** -2.10* -3.33*** -1.87*** Non-Agric growth/cap*gini t Non-Agric growth/cap*10% mining share Recall:

11 Agriculture more poverty reducing $1-day; Nonagriculture more poverty reducing $2-day Poverty $1-day $2-day Country fixed effects estimates HC PG2 HC PG2 Agric growth/cap -24.8*** -25.3*** ** Agric growth/cap*gini t *** 49.62** 19.32** 21.25* Non-Agric growth/cap *** -5.56** Non-Agric growth/cap*gini t *** Non-Agric growth/cap*10% mining share *** 3.27**

12 In sum - findings by channel Slower agricultural growth follows from Engel s Law and is not to be equated with inherently lower productivity Larger interlinkage effects from agriculture decline as countries develop, but have not yet disappeared in SSA Much larger participation by the very poor in growth from agriculture, but not by the $2-day poor and not in fundamentally unequal societies

13 Combined effects (participation & indirect) Direct effect Growth component Growth Ag Growth component y ai Participation and share components Indirect effect Poverty Reduction P t Direct effect Nonag Growth Ynat

14 Agriculture and poverty reduction Growth in agriculture at least five times more powerful in reducing poverty among the poorest of the poor In non-agriculture more powerful among better off poor ($2-day headcount) In agriculture up to 3.2 times more effective in low income countries, with the advantage declining as countries become richer and inequality becomes high Poverty reducing effects from nonagricultural growth decline substantially in the presence of extractive industries

15 Thank you for your attention! Further Reading: Christiaensen, Demery, Kuhl, 2010, The (Evolving) Role of Agriculture in Poverty Reduction An Empirical Perspective, Journal of Development Economics, forthcoming.