Millennium Development Goal of Halving Poverty in Asia and the Pacific Region: Roles of Agriculture and Institutions Ganesh Thapa and Raghav Gaiha International Fund for Agricultural Development (IFAD) Rome Agricultural and Rural Development for - PowerPoint PPT Presentation

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Millennium Development Goal of Halving Poverty in Asia and the Pacific Region: Roles of Agriculture and Institutions Ganesh Thapa and Raghav Gaiha International Fund for Agricultural Development (IFAD) Rome Agricultural and Rural Development for

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Title: Millennium Development Goal of Halving Poverty in Asia and the Pacific Region: Roles of Agriculture and Institutions Ganesh Thapa and Raghav Gaiha International Fund for Agricultural Development (IFAD) Rome Agricultural and Rural Development for


1
Millennium Development Goal of Halving Poverty
in Asia and the Pacific Region Roles of
Agriculture and Institutions Ganesh Thapa and
Raghav GaihaInternational Fund for Agricultural
Development (IFAD)RomeAgricultural and Rural
Development for Reducing Poverty and Hunger in
Asia In Pursuit of Inclusive and Sustainable
Growth Policy Forum Organized by IFPRI at ADB,
Manila, Philippines, August 9-10, 2007
2
Introduction
  • Achievement of MDG 1 in Asia/Pacific Region is of
    considerable importance, as the region accounted
    for 64 of the worlds 982 million poor in 2004
  • Extreme poverty in the developing world is
    overwhelmingly rural ? rural and agricultural
    development has a vital role in poverty
    reduction.
  • Although various MDGs are interrelated, IFAD
    study focuses on halving the proportion of the
    dollar poor.

3
Determinants of Poverty
Endogenous
Exogenous or predetermined
Adapted from Rodrik et al. (2002), Hoff
(2003), and Bardhan (2005)
4
Methodology
  • Stage 1 identification assessment of
    determinants of income inequality (e.g. land
    inequality), institutions (historical
    geographical factors), and openness (e.g.
    institutions, geographical factors).
  • Stage 2 determinants of per capita income (such
    as lagged agricultural income per capita,
    openness, geographical factors, institutions).
  • Stage 3 analysis of determinants of dollar poor
    (e.g. income, income inequality, institutions,
    and geographical factors).

5
Methodology (continued)
  • Model estimated using a database compiled from
    FAO, World Bank, UN, and other research studies
  • 5 institutional quality indicators used include
    voice and accountability, political stability and
    absence of violence, control of corruption, rule
    of law, and an aggregate index of institutional
    quality.
  • Simulations carried out to deepen understanding
    of policy choices in attaining MDG 1.
  • These include enhancing agricultural productivity
    and overall growth, reduction of income
    inequality, and institutional improvements.

6
Findings
  • Poverty elasticity with respect to GDP per capita
    ranges from -0.69 to -0.92, depending on the
    institutional quality variant.
  • Required growth rates range from 3.01 to 4.02
    (actual growth rate of 0.86 during 1985-98)
  • East Asia actual growth rate gt required rate
    under different institutional variants
  • South Asia actual rate lt what is required, in
    all cases ? need for growth acceleration is thus
    greater

7
Findings (continued)
  • Agricultural income per capita, through its
    contribution to GDP per capita, makes a
    substantial contribution to poverty reduction.
  • Required rates of agricultural growth gtgt actual
    rates (entire sample, East Asia, South Asia)
  • Institutional quality impacts poverty through
    income, and not directly.
  • Openness ceases to have any effect on income
    (after allowing for variation in index of
    openness due to institutional quality and
    geographical factors)

8
Findings (continued)
  • Even modest improvements in institutional quality
    are associated with significantly positive
    effects on income and, consequently, on poverty
  • Head-count index declines markedly, assuming
    voice and accountability index of top 30
    performers, and historic growth of agri. income
    (China, Bangladesh, India, Sri Lanka, Indonesia)
  • Both South and East Asia record substantially
    lower head-count values for 2015, relative to
    base line
  • An alternative formulation points to the
    importance of human capital in influencing
    institutional quality, which in turn has a
    positive impact on income

9
Nature of Poverty in Asia/Pacific in 2015
  • Even when Asia/Pacific region achieves MDG 1 by
    2015, the bulk of remaining poor will be
    indigenous peoples, women and other marginalized
    groups living in less-favoured areas
  • Vietnam share of ethnic minorities in total poor
    is projected to increase to 42 by 2010, up from
    20 in 1993
  • China ethnic minorities are 9 of population but
    40 of poor concentrated in most remote mountain
    areas, with difficult agro-ecological conditions
  • India poverty level for scheduled tribes
    projected to decline from 51 in 1994 to 29 in
    2015 (2.56 annual decline) compared to 31 and
    8 for others (6 annual decline)

10
Towards a Strategy of Pro-Poor Growth
Institution Building
  • Agricultural Productivity
  • The analysis points to the important role of
    agri. growth in overall growth process and in
    reducing poverty
  • Although agricultures share of GDP has fallen
    over time, it continues to be important for
    employment
  • Agricultures success in less favoured areas
    conditional on significant policy and
    institutional reforms that ensure equitable
    access to land, markets, credit, extension

11
Towards a Strategy of Pro-Poor Growth
Institution Building
  • Agricultural Service Delivery
  • Need to focus on improving responsiveness of
    technology innovation system to needs of poor
    farmers in LFAs, rather than on promoting
    specific technologies
  • Strong prospects for improving farmers
    productivity and livelihoods through conventional
    approaches, investments in biotechnology can be
    complementary
  • Develop capacities of farmer organizations to
    enable smallholders to voice their technology
    needs

12
Towards a Strategy of Pro-Poor Growth
Institution Building
  • Agricultural Service Delivery
  • Promote vertical integration of smallholders in
    value chains in a manner that protects their
    interests (e.g. contract farming for supply to
    supermarkets)
  • Promote policy reforms and enabling legal
    framework for private sector participation in
    agri research, extension, seed and marketing
  • Support PPP, esp. in infrastructure development

13
Towards a Strategy of Pro-Poor Growth
Institution Building
  • Institutional Quality
  • Domestic institutions of conflict management can
    mitigate severity of economic hardship due to
    external shock (Korea, Thailand vs. Indonesia
    after Asian crisis)
  • A rigid view of institutional reforms may be too
    demanding in some contexts (e.g. China)
  • Maintaining reform momentum, and political and
    institutional continuity make a significant
    difference to growth and poverty reduction
    (Vietnam)

14
Towards a Strategy of Pro-Poor Growth
Institution Building
  • Institutional Quality
  • Capture of local governments in a context of
    acute inequality of endowments
  • Mechanisms of informal cooperation work well in
    some activities and not in others, even when the
    group size is small and members are family
    related
  • Strengthening of social capital (norms of equity,
    productivity and participation, and creating
    space for new roles at the grassroots) has a high
    payoff

15
Towards a Strategy of Pro-Poor Growth
Institution Building
  • Institutional Quality
  • Greater attention must be given to conflict
    prevention through a more inclusive process of
    rural development
  • A major priority is to reallocate resources to
    build social infrastructure, expand livelihood
    options and strengthen local institutions of
    conflict management

16
Some Issues for Discussion
  • Primacy of institutions in a pro-poor strategy of
    growth ? sharper focus of development projects on
    institutional quality
  • Greater clarity in linking and adapting locally
    appropriate poverty indicators to dollar-a-day
    criterion for impact assessment
  • Need to ensure that the poor are able to seize
    income-earning opportunities in a globalized
    environment ? need for policies that facilitate
    effective linkages with market ? focus on
    infrastructure, research, extension, deregulation

17
Some Issues for Discussion
  • Sequencing of policy reforms ? creating more
    competitive environment for farm and non-farm
    activities, without causing severe hardships to
    disadvantaged groups (indigenous peoples, women)
  • Cost-effectiveness of investments in
    less-favoured areas in roads, markets, etc. and
    their production and poverty impacts not well
    understood (given diversity of such areas in pop.
    Density, livelihood options, vulnerability)
  • Creation of conditions for disadvantaged groups
    to benefit from non-farm activities (e.g. through
    acquisition of new skills, easier access to
    credit, marketing networks)

18
Some Issues for Discussion
  • Need to strengthen voice and accountability
    mechanisms for the poor (e.g. through easier
    access to official records, producer groups,
    womens associations)
  • Need for public-private partnerships to overcome
    coordination failures (govt, NGOs, markets)
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