Agricultural water management and poverty in Ethiopia

The main focus of this article is to explore whether access to selected agricultural water management (AWM) technologies has led to significant reduction in poverty and, if they did so, to identify which technologies had higher impacts. In measuring impact we estimated the average treatment effect for the treated on crop income and measured the differences in consumption expenditures per adult equivalent of those with access and without access using matched data. The estimated average treatment effect was significant and amounted to USD 82 per season. Moreover, there was 24 less poverty incidence among users of AWM technologies compared to nonusers. All technologies were found to have significant poverty reducing impacts with micro dams, deep wells, river diversions, and ponds leading to 37%, 26%, 11%, and 9% reduction in poverty incidence compared to rainfed system. Finally, our study identified the most important correlates of poverty on the basis this we made the policy recommendations to build assets (AWM technologies, livestock, etc); to enhance human resource development and improve the functioning of labor markets for enhanced impact of AWM technologies on poverty.     

Agricultural trade and poverty in Chile: a spatial analysis of product tradability

Many questions have arisen about the relationship between international agricultural trade and poverty in developing countries. This article explores these questions by analyzing local agricultural tradability indices, which measure the degree to which commodities produced in a particular region are traded internationally. Data are examined for Chile, a middle‐income country with a history of international agricultural trade over the last decades. Empirical results indicate that a higher agricultural tradability index is associated with lower poverty rates across Chilean comunas.     

Agricultural commercialisation,asset growth and poverty in rural Vietnam

Poverty remains a substantial threat in rural areas of many developing countries, and solving this problem requires an in-depth understanding of the income generating capacity that determines poverty. This paper examines the impact of agricultural commercialisation on the capability of rural households to accumulate and productively use assets and reduce structural and multidimensional poverty. A longitudinal dataset of around 2000 households with a total of 9781 observations from five rural surveys undertaken in the period 2008–2017 in Vietnam is used. Results from a fixed effects regression with an instrumental variable and a control function approach show that agricultural commercialisation has a positive effect on the accumulation of assets and reduces multidimensional and structural poverty over time. However, the effect is not homogeneous and is larger for households that are not mainly engaged in rice commercialisation. This suggests that commercialisation can be a path out of poverty, especially if policy makers move towards utilising other crops instead of rice.     

Agricultural growth and poverty in an archetypical middle income country: Chile 1987–2003

Is a reduced share of agriculture in the economy an obstacle for the agricultural sector to play an important role in poverty alleviation? What is the key channel, if any, by which agriculture is benefiting the poor in Chile that would be worthwhile to promote in other countries? By answering these questions we expand the literature on poverty and composition of growth by proposing a methodology that allows to disentangle the mechanisms by which agricultural growth can be poverty reducing. We find that in Chile agriculture plays a large role in reducing poverty, and most of this effect is channeled through the labor market.     

Asset versus consumption poverty and poverty dynamics in rural Ethiopia

Several studies have shown conceptually that assets form a more robust basis for identifying the poor than do flow variables like expenditures or income. Asset‐based poverty classification can be used to distinguish structural from stochastic poverty and can enable projection of poverty dynamics through time. Nonetheless, little work has empirically compared poverty measurement based on assets and expenditures to indicate the practical implications of the choice of poverty measure. This article uses panel data (between 1994 and 2004) from Ethiopia to generate asset‐ and expenditures‐based poverty classifications. Asset dynamics are then explored to test for the existence of multiple asset index equilibria that could constitute evidence of poverty traps. Results provide evidence of multiple equilibria and show that the asset‐based poverty classifications predict future asset and expenditures poverty status more accurately than expenditures‐based measures. The findings confirm that the asset‐based measure could be used to more carefully target poverty interventions.     

Food market liberalization: History and prospects

Abstract

Government intervention has been a feature of food markets in both industrialized and agrarian economies. However, the last 10 years have seen reforms aimed at reducing intervention; these have been a characteristic of ‘structural adjustment’. The process of reform has involved the replacement of administered by market‐determined prices and the abolition of trading parastatals or the removal of their monopoly. Despite an almost complete consensus that reforms are necessary and the absence of coherent local opposition, the pace and extent of reforms have varied. Moreover, views about liberalization tend to be polarized. Proponents argue that continued intervention is inefficient, unaffordable and distorting; antagonists suggest that unmodified markets lead to unacceptable inequalities, and expose producers and consumers to unacceptable risks. Moreover, weak fragmented markets do not constitute a sufficient base for sustained growth. This paper reviews the experience. It concludes that simple solutions of substituting public with private trading are not necessarily possible nor desirable, and argues that the nature of the debate may be misleading. The way forward may not lie in a choice between private market supremacy and conventional government intervention.     

Consistent poverty comparisons and inference

Building upon the cost of basic needs (CBN) approach, an integrated approach to making consumption-based poverty comparisons is presented. This approach contains two principal modifications to the standard CBN approach. The first permits the development of multiple poverty bundles that are utility consistent. The second recognizes that the poverty line itself is a random variable whose variation influences the degree of confidence in poverty measures. We illustrate the empirical importance of these two methodological changes for the case of Mozambique. With utility consistency imposed, estimated poverty rates tend to be systematically higher in rural areas and lower in urban areas. We also find that the true confidence intervals on the poverty estimates—those incorporating poverty line variance—tend to be considerably larger than those that ignore poverty line variance. Finally, we show that these two methodological changes interact. Specifically, we find that imposing utility consistency on poverty bundles tends to tighten confidence intervals, sometimes dramatically, on provincial poverty estimates. We conclude that this revised approach represents an important advance in poverty analysis. The revised approach is straightforward and directly applicable in empirical work.     

Measuring soil quality dynamics A role for economists, and implications for economic analysis

Measuring soil quality is extremely difficult, yet it has clear economic importance. In particular, there is a great deal of empirical interest in the dynamics of soil quality evolution when land managers respond to policies and other incentives. Yet current methodologies for measuring changes in agricultural land quality are largely static and rely heavily either on incomplete measures such as proxy variables, or ad hoc indexes of selected soil characteristics. Moreover, much empirical work relies on static econometric techniques or simulation models. In this paper, we develop a means to infer soil quality changes from input and output data using a dynamic production function model. Using data from field experiments, we estimate the model in a way that allows the recovery of a dynamic measure of soil quality whose evolution depends on variations in management practices. Our methodology and findings will help provide firmer empirical foundations for analyses of the economic implications of land degradation and the soil quality implications of agricultural policies.     

Global market shocks and poverty in Vietnam: the case of rice

World food prices have experienced dramatic increases in recent years. These “shocks” affect food importers and exporters alike. Vietnam is a major exporter of rice, and rice is also a key item in domestic production, employment, and consumption. Accordingly, rice price shocks from the world market have general equilibrium impacts and as such, their implications for household welfare are not known ex ante. In this article, we present a framework for understanding the direct and indirect welfare effects of a global market shock of this kind. We quantify transmission of the shock from global indicator prices to domestic markets. Then we use an applied general equilibrium model to simulate the economic effects of the price changes. A recursive mapping to a nationally representative household living standards survey permits us to identify in detail the ceteris paribus effects of the shock on household incomes and welfare. In this analysis, interregional and intersectoral labor market adjustments emerge as key channels transmitting the effects of global price shocks across sectors and among households.     

Cash crop liberalization and poverty alleviation in Africa: evidence from Malawi

This article uses the case of burley tobacco liberalization in Malawi to investigate the efficacy of cash crop liberalization as an instrument for poverty alleviation in sub‐Saharan Africa. The principal justification for cash crop liberalization is that markets allow farm households to increase their incomes by producing that which provides the highest return to their productive resources and use the cash to buy consumption goods. Using a latent welfare model, we find that households that selected to grow cash crops had higher incomes than those that did not grow cash crops. However, we also find that due to the lumpiness and seasonality of cash crop incomes, higher household incomes, while increasing food purchases did not significantly affect per capita food intake. Irrespective of participation in cash crops, for much of the cropping season rural households seem to rely more on nonfarm income for expenditure and consumption smoothing.     

Food policy and poverty in Indonesia: a general equilibrium analysis*

Rice is Indonesia's staple food and accounts for large shares of both consumers' budgets and total employment. Until recently, Indonesia was the world's largest importer, but rice import policy is now highly protectionist. Since early 2004, rice imports have been officially banned. Advocates of this policy say it reduces poverty by assisting poor farmers. Opponents say it increases poverty, stressing negative effects on poor consumers. This paper uses a general equilibrium model of the Indonesian economy to analyse the effects of a ban on rice imports. The analysis recognises 1000 individual households, including all major socioeconomic categories, disaggregated by expenditures per person. It takes account of effects on each household's real expenditure and its income, operating through wages and returns to land and capital. The results indicate that the rice import ban raises the domestic price of rice relative to the import price by an amount equivalent to a 125 per cent tariff, six times the pre‐2004 tariff. Poverty incidence rises by a little under 1 per cent of the population and increases in both rural and urban areas. Among farmers, only the richest gain. These results are qualitatively robust to variations in key parametric assumptions.     

Political dynasties and poverty: measurement and evidence of linkages in the Philippines

Political dynasty refers to a situation in which an incumbent official has at least one relative in elected office in the past or the present government. In the Philippines, for example, political dynasties comprise over 70% of its Congress. The impact of political dynasties on socioeconomic outcomes such as poverty is an important empirical question (do political dynasties exacerbate poverty?), and this paper presents some evidence. The analysis of data from the Philippines finds a worsening effect of political dynasties on poverty in provinces outside Luzon.     

World food prices and poverty in Indonesia

Spikes in international food prices in 2007–2008 worsened poverty incidence in Indonesia, both rural and urban, but only by small amounts. The paper reaches this conclusion using a multisectoral and multihousehold general equilibrium model of the Indonesian economy. The negative effect on poor consumers, operating through their living costs, outweighed the positive effect on poor farmers, operating through their incomes. Indonesia's post‐2004 rice import restrictions shielded its internal rice market from the temporary world price increases, muting the increase in poverty. But it did this only by imposing large and permanent increases in both domestic rice prices and poverty incidence. Poverty incidence increased more among rural than urban people, even though higher agricultural prices mean higher incomes for many of the rural poor. Gains to poor farmers were outweighed by the losses incurred by the large number of rural poor who are net buyers of food, and the fact that food represents a large share of their total budgets, even larger on average than for the urban poor. The main beneficiaries of higher food prices are not the rural poor, but the owners of agricultural land and capital, many of whom are urban based.