Testing Asset Dynamics for Poverty Traps in Rural China

This paper quantifies the link between agricultural income, caloric intake, and asset‐based poverty in rural China. The analysis employs data from the China Health and Nutrition Survey including 1,279 households in eight survey years. The balanced data models are then estimated to reveal the role that various shocks (e.g., prices and climate/weather) play in determining the asset dynamics between different income groups using four different asset indexes which cover comprehensive, fixed, productive, and consumable assets. To capture absolute asset dynamics, a fourth‐degree polynomial function was used in a three‐stage least squares system made up of an asset index, caloric intake, and farm income. The empirical results do not show evidence of a poverty trap based on multiple equilibriums.     

Asset‐based poverty transition and persistence in rural China

This article tests empirically for transition and persistence of poverty in rural China based on the theory of asset‐based poverty traps. It proposes an analytical framework mitigating the problem of endogenous switching between accumulation regimes and disentangling the true state‐dependence of poverty. Specifically, a dynamic asset threshold separating households into downward and upward mobility regimes is identified after taking households’ unobserved characteristics and observed regime‐differentiated accumulation strategies into account. The static analysis identifies causality running from settling into a downward mobility regime to the probability of poverty measured by consumption. Furthermore, allowing for endogenous initial poverty status, the dynamic analysis finds strong true state‐dependence in poverty. Households with the same characteristics are nearly twice as likely to be poor as if they had not previously switched to the accumulation regime. Assets below the dynamic threshold serve as a conduit through which poverty propagates itself. Factors that help to break this vicious circle are identified.     

Implications of high food prices for poverty in Pakistan

The study estimates the impacts of rising world food prices on poverty in rural and urban areas of Pakistan. Household income and expenditure data for 2004/2005 is used to estimate compensated and uncompensated price and expenditure elasticities using the linear approximation of the almost ideal demand system. Taking the unexpected component of higher domestic food prices in 2007/2008, own and cross price compensated elasticities are used to derive the changes in the quantity consumed, food expenditure and impacts on poverty assuming the food crisis happened in 2004/2005. The results indicate that poverty increased by 34.8%, severely affecting the urban areas where poverty increased by 44.6% as compared to 32.5% in rural areas. The estimates show that 2.3 million people are unable to reach even one‐half of poverty line expenditures while another 13.7 million are just below and 23.9 million are just above the poverty line. In the short run, it is important to ensure food availability to these people. In the long run, the policy environment of subsidizing urban food consumers by keeping wheat prices lower than the international price, needs to be reconsidered to provide the right incentives to increase food availability.     

衔接过渡期扶贫资产差异化治理研究

扶贫资产的衍生主要与扶贫行为和扶贫资金投入相关。根据资金投入领域的不同,扶贫资产进一步分化为政府资产、村集体资产、贫困户家庭资产及组合型资产等。由于资产类型的多样化,"差异化治理"成为实现扶贫资产有效治理的重要保障。应从晰化产权主体、细化责任主体、优化管理方式、活化资产使用、具化收益分配入手,推进扶贫资产差异化治理,确保治理有效。     

衔接过渡期扶贫资产差异化治理研究

扶贫资产的衍生主要与扶贫行为和扶贫资金投入相关。根据资金投入领域的不同,扶贫资产进一步分化为政府资产、村集体资产、贫困户家庭资产及组合型资产等。由于资产类型的多样化,"差异化治理"成为实现扶贫资产有效治理的重要保障。应从晰化产权主体、细化责任主体、优化管理方式、活化资产使用、具化收益分配入手,推进扶贫资产差异化治理,确保治理有效。     

Implications of higher global food prices for poverty in low‐income countries1

In many poor countries, the recent increases in prices of staple foods have raised the real incomes of those selling food, many of whom are relatively poor, while hurting net food consumers, many of whom are also relatively poor. The impacts on poverty will certainly be very diverse, but the average impact on poverty depends upon the balance between these two effects, and can only be determined by looking at real‐world data. Results using household data for 10 observations on nine low‐income countries show that the short‐run impacts of higher staple food prices on poverty differ considerably by commodity and by country, but that poverty increases are much more frequent, and larger, than poverty reductions. The recent large increases in food prices appear likely to raise overall poverty in low‐income countries substantially.     

Effects of Non‐Farm Employment on Rural Income Inequality in Developing Countries: An Investment Perspective

This paper makes several points based on a review of household survey evidence from Africa, Asia and Latin America. (i) In contrast to conventional wisdom, the evidence is very mixed as to the effect of non‐farm employment on rural income inequality. The non‐farm employment and microenterprise programmes now in vogue will not necessarily resolve rural income inequality problems and attendant social tensions nor automatically benefit the poor. (ii) Policymakers should be worried by substantial evidence of poor people's inability to overcome important entry barriers to many non‐farm activities. (iii) The main determinants of unequal access to non‐farm activities are the distribution of capacity to make investments in non‐farm assets and the relative scarcity of low capital entry barrier activities. Therefore, it is crucial for public investments and policy to favour an increase in the access of the poor to assets that allow them to overcome non‐farm employment entry barriers, (iv) It would be an error to assume that one can address asset‐poverty and inequality in the non‐farm sector without addressing farm‐side problems and vice versa.     

精准扶贫背景下扶贫资产管理的实践与机制创新

[目的]脱贫攻坚战略实施以来,各地区形成和沉淀了大量的农业、产业扶贫项目资产,而扶贫资产管理作为持续发挥项目效益、巩固脱贫质量的重要抓手,试点地区实践情况亟待加以梳理与分析。[方法]文章在文献梳理的基础上以流程化管理理论为切入点,探讨了扶贫资产内涵及部分试点地区实施现状,在解析问题的基础上构建扶贫资产"七步法"的流程化管理模式。[结果]部分试点地区积极探索扶贫资产管理模式并取得了一定的成效;但部分地区仍存在产权界定不清晰、收益分配不合理、监管不到位等问题,而完善扶贫资产管理机制能够有效解决"管什么"和"怎么管"的难题,进一步实现管理效率的提升。[结论]各地区应坚持以人为本、因地制宜的原则,积极探索并实施差异化的扶贫资产管理模式,切实提升扶贫资产管理效率为实现与乡村振兴的有效衔接奠定基础。     

Cocoa pricing options and their implications for poverty and industrialization in Ghana

This study establishes the cocoa pricing subsidization options that will stabilize processors’ throughput while meeting the multiple, but possibly conflicting, public policy objectives of maximizing government revenue and reducing poverty among Ghanaian cocoa beans producers. To evaluate these options, we construct and numerically simulate a structural dynamic stochastic model of a representative cocoa processor who maximizes the present value of current and expected future profits, given prevailing market conditions and cocoa pricing policies. Our results indicate that, given current processing capacity, the Ghana Cocoa Board would have to offer a 92% discount to processors on main‐crop beans in order to achieve the industrial goal of locally processing 40% of annual production. This would cause light‐crop beans used in processing to be completely displaced by main‐crop beans carried over as inventory. It would also increase mean processor revenues by 167%, but cause the Ghana Cocoa Board to operate at a significant deficit, implying that the stated goal could only be achieved through massive government subsidies.     

Implications of the global growth slowdown for rural poverty

Over the past 25 years, higher growth in developing countries has contributed to a dramatic fall in global poverty, although poverty rates in rural areas remain higher than in urban areas. Unfortunately, projected growth rates have fallen in recent years; this article examines the impact of this slowdown on the poor, particularly the rural poor. It first uses a global model to assess the impacts of lower productivity on key price and income variables. It then uses microsimulation models for almost 300,000 households to assess the impacts on their real incomes. Although poverty rates overall are projected to fall substantially, the poorest countries see the greatest slowdown in poverty reduction, with over 5% of their population projected to remain below the poverty line. In addition, poverty rates will remain alarmingly high in many countries. Overall, 38 million fewer people will leave extreme poverty compared to earlier projections. Farm households are at particular risk in middle‐income countries, with over 1.5% more of the farming population remaining trapped in poverty than previously estimated. By 2030, average extreme poverty in rural areas is projected at about 7.5%, rather than 7.1% under the earlier growth projections. Clearly, a strong focus on policies for poverty reduction will be vital for eliminating poverty by 2030.     

Nonfarm diversification,poverty, economic mobility,and income inequality: a case study in village India

This article assembles data at the all‐India level and for the village of Palanpur, Uttar Pradesh, to document the growing importance, and influence, of the nonfarm sector in the rural economy between the early 1980s and late 2000s. The suggestion from the combined National Sample Survey and Palanpur data is of a slow process of nonfarm diversification, whose distributional incidence, on the margin, is increasingly pro‐poor. The village‐level analysis documents that the nonfarm sector is not only increasing incomes and reducing poverty, but appears as well to be breaking down long‐standing barriers to mobility among the poorest segments of rural society. Efforts by the government of India to accelerate the process of diversification could thus yield significant returns in terms of declining poverty and increased income mobility. The evidence from Palanpur also shows, however, that at the village‐level a significant increase in income inequality has accompanied diversification away from the farm. A growing literature argues that such a rise in inequality could affect the fabric of village society, the way in which village institutions function and evolve, and the scope for collective action at the village level. Failure to keep such inequalities in check could thus undermine the pro‐poor impacts from the process of structural transformation currently underway in rural India.     

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.     

How road improvement reduces poverty: the case of Laos

A general equilibrium modeling approach is used to study the effect that rural road improvement has on poverty incidence in Laos. Household survey data are used to distinguish three categories of rural villages according to their road access: (i) no vehicular access; (ii) dry season only access; and (iii) all weather access. A general equilibrium model of the Lao economy is then used to simulate, first, the effect of upgrading category (i) to category (ii) roads, and second, category (ii) to category (iii) roads. The former has a larger poverty‐reducing effect but is also more costly.     

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.     

Formalisation of land rights in the South: An overview

Formalisation of property rights has recently been proposed as a way of reducing poverty. The poor, it is said, do not lack assets, they lack only the formal, protected rights necessary to make these assets engines of entrepreneurship, thriving markets, and information networks. Historical evidence with regard to formalisation programmes is, however, mixed at best, and current universalist proposals contain numerous flaws. A more context-specific and flexible approach is needed, with greater attention to local settings and specific objectives and tools. Property formalisation should not be considered merely a technical tool but must take account of politics and culture.     

China’s poverty alleviation over the last 40 years: successes and challenges

Over the past 40 years, China has made significant progress towards its poverty alleviation goals. The rural population under the current poverty line has decreased by 739.9 million. China has contributed to more than 70 per cent of world poverty reduction. To better promote the new anti‐poverty strategy and to serve as a reference for poverty alleviation in other developing countries, this paper summarises the main experiences of China’s poverty alleviation over the past 40 years and then discusses the challenges associated with implementing the targeted poverty alleviation policy in the new era. China’s experience with poverty alleviation includes development‐oriented poverty alleviation, improving self‐development capabilities of the poor population, encouraging multiple subjects to participate in poverty alleviation and focusing on innovation and ways to improve poverty alleviation. Although China’s poverty alleviation initiatives have achieved significant successes, there are still several challenges that should be of concern in the coming years, such as the diminishing marginal effect of financial inputs on poverty alleviation, the resulting negative incentives for the poor to improve their internal motivations and the insufficient participation of markets and social forces in poverty alleviation. Given these challenges, this paper provides suggestions for anti‐poverty policies beyond 2020.     

Urbanization and poverty reduction: the role of rural diversification and secondary towns1

A rather unique panel tracking more than 3,300 individuals from households in rural Kagera, Tanzania, during 1991/1994–2010 shows that about one out of two individuals/households who exited poverty did so by transitioning out of agriculture into the rural nonfarm economy or secondary towns. Only one out of seven exited poverty by migrating to the big cities, even though those moving to the city experienced on average faster consumption growth. Further analysis of a much larger cross‐country panel of 51 developing countries cannot reject that rural diversification and secondary town development lead to more inclusive growth patterns than metropolitization. Indications are that this follows because more of the poor find their way to the rural nonfarm economy and secondary towns, than to distant cities. The development discourse would benefit from shifting beyond the rural–urban dichotomy and focusing more instead on how best to urbanize and develop its rural nonfarm economy and secondary towns.     

Pathways out of poverty in lagging regions: evidence from rural western China

How to reduce poverty in lagging regions remains much debated and underserved with solid empirical evidence. This study illustrates an empirical methodology to analyze the pathways households followed out of poverty and to explore their potential in the future using 2000–2004 rural household panel data from two lagging provinces of China, Inner Mongolia and Gansu. It finds that rising labor productivity in agriculture has been key in understanding poverty reduction in rural lagging areas of these provinces and that it still holds much promise. Circular migration has also been important in Gansu, though less so in Inner Mongolia. On average, rural diversification has not proven to contribute much to poverty reduction and income transfers and agricultural tax abolishment have only helped at the margin. The findings from these two case studies highlight that the scope for reducing poverty in rural lagging regions can still be substantial in agriculture, also when nonagriculture drives national growth.     

Introduction to the special issue on the role of nonfarm income in poverty reduction: evidence from Asia and East Africa

In this special issue, we present seven studies that collectively attempt to investigate the role of non‐farm income in long‐term and short‐term poverty reduction in Asia and Africa. The first four studies out of the seven use long‐term panel data over two decades in the Philippines, Thailand, Bangladesh, and India. These studies show drastic increases in non‐farm income shares and corresponding declines in poverty levels over time, especially in the Philippines and Thailand. Education levels of household members and returns to education also increased significantly in these countries. The remaining three studies use cross‐sectional and short‐term panel data from Ethiopia, Kenya, and Uganda. These African studies show high proportions of poor households and low shares of non‐farm income that are somewhat comparable to the situation in the 1980s described in the Asian studies. Without the Green Revolution that provided stable farm income and potential financial resources to invest in children' education in Asia, it is not clear if African farm households can follow the Asian examples.