From the CITY to the FIELD / BM – Agriculture

Five new insights on how AGRICULTURE can help reduce POVERTY

  • The idea that a productive agricultural sector is fundamental for the creation of employment and the reduction of poverty is now widely shared in the community dedicated to the task of development.
  • Pessimism around agriculture had been installed in the 1990s and 2000s, accompanied by a decrease in both the attention paid to agricultural policies and agricultural investment. The increases in food prices that occurred in 2008 highlighted the need to take more measures to strengthen agriculture in developing countries.
  • At present, world food prices are still 70% higher than before the crisis (40% to 50% in real terms) and the trade and policy environment is much more favorable to agriculture.
  • … Through the use of diverse analytical techniques (theoretical derivations, computable general equilibrium model [CGE], econometrics), the permanent importance of agricultural development to reduce poverty is confirmed. The works also add important nuances. The following are five conclusions (i) of this special edition.



Growth in the agricultural sector continues to reduce poverty to a greater extent than growth in other sectors

   In the agricultural sector, growth is still, in general, two to three times more effective in reducing poverty than equivalent growth generated in other sectors.

The poorest are the most benefited with agricultural growth

– The effects of agriculture on poverty reduction are greater among the poorest people in society and the advantage of agricultural growth over non-agricultural growth in reducing poverty eventually disappears as countries turn More rich

–  In addition, the lower the literacy rates, the greater the progressiveness of the poverty-reducing effect of agricultural growth compared to non-agricultural growth.


The comparative advantage of agriculture is not limited to landlocked countries

  • Simulations of an EGC model of around 300,000 households in 31 countries indicate that the advantage of agriculture is maintained, regardless of whether the food product is considered tradable or not.
  • Agricultural growth seems to be a priority for the reduction of poverty in both coastal and landlocked economies.

However, the advantage of agriculture over non-agricultural sectors varies according to the subsectors of the latter

– The effects of non-agricultural subsectors on poverty reduction are very heterogeneous. The elasticities of poverty in relation to growth in trade and transportation services are closer to those of agriculture, and those for manufacturing – especially the processing of agricultural products – can in some cases even exceed them.

–  In contrast, the effects of mining, finance and business and government services on poverty reduction are much more limited.


The advantages of agriculture over non-agricultural sectors also depend on sources of financing, a highly ignored aspect

   The way in which public investments are financed has distributional consequences of the first order that can cancel out the underlying benefits of higher productivity. For example, an increase in the formation of public capital for agriculture can negatively affect the real wages (of consumption) of the unskilled rural labor force if the financing modality is through a tariff, but it can have a positive effect if finances through a consumption tax, which mainly affects skilled labor in urban areas

REF. Executive Summary of the article «Five new insights on how agriculture can help reduce poverty» of the WORLD BANK GROUP- 22 August 2018

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