News Update on Agricultural Growth :Oct 2021

Agricultural Growth and Poverty Reduction: Additional Evidence

Agricultural growth has long been recognized as an important instrument for poverty reduction. Yet, measurements of this relationship are still scarce and not always reliable. The authors present additional evidence at both the sectoral and household levels based on recent data. Results show that rural poverty reduction has been associated with growth in yields and in agricultural labor productivity, but that this relation varies sharply across regional contexts. GDP growth originating in agriculture induces income growth among the 40 percent poorest, which is on the order of three times larger than growth originating in the rest of the economy. The power of agriculture comes not only from its direct poverty reduction effect but also from its potentially strong growth linkage effects on the rest of the economy. Decomposing the aggregate decline in poverty into a rural contribution, an urban contribution, and a population shift component shows that rural areas contributed more than half the observed aggregate decline in poverty. Finally, using the example of Vietnam, the authors show that rapid growth in agriculture has opened pathways out of poverty for farming households. While the effectiveness of agricultural growth in reducing poverty is well established, the effectiveness of public investment in inducing agricultural growth is still incomplete and conditional on context.[1]

Rural Reforms and Agricultural Growth in China

This paper employs province-level panel data to assess the contributions of decollectivization, price adjustments, and other reforms to China’s agricultural growth in the reform period. Decollectivization is found to improve total factor productivity and to account for about half of the output growth during 1978-1984. The adjustment in state procurement prices also contributed positively to output growth. Its impact came mainly from the responses in input use. The effect of other market-related reforms on productivity and output growth was very small. Reasons for slowdown in agricultural growth after 1984 are also analyzed. [2]

A Policy Agenda for Pro-Poor Agricultural Growth

Sub-Saharan Africa and parts of South Asia are likely to hold large numbers of very poor rural people into the foreseeable future. Although both history and theory suggest a pre-eminent role for agricultural growth in poverty reduction in poor agrarian economies, such growth today faces new difficulties. Many of these difficulties are endogenous to today’s poor rural areas, others result from broader processes of global change, but some are due to changes in the dominant policy environment, emphasizing liberalization and state withdrawal. Examination of 20th century Green Revolutions suggests that active state interventions were important in supporting critical stages of agricultural market development. Unfortunately such interventions’ benefits in institutional development are easily overlooked, whereas their high costs are much more visible. Policy implications are discussed.[3]

Agriculture and Manufacturing Sector Growth in Namibia During the Period 1981 to 2012: A Granger Causality Test

Namibia became independent in 1990. Since then, the democratic government has pursued various development policy tools to empower Namibians economically. The 4th National Development Plan identified four strategic economic growth enhancing activities, namely agriculture, manufacturing, logistics and tourism. Agriculture remains the largest employer while manufacturing, logistics and tourism are growing, but slowly. This paper is premised on investigating whether or not there is a causal and long term relationship between agriculture and manufacturing sector growth over the period 1981-2012. Ascertaining the direction of the relationship is part of the objectives. Analytical methods that were used include unit root, correlation test and a Granger Causality model. With the use of time series data, the results confirmed stationarity of the data. With 31 observations, no causal relationships were established between agriculture and manufacturing in Namibia. Appropriate policy interventions are required to influence how the two sectors should benefit from each other. Such holds potential for both sustained employment creation opportunities and economic growth in Namibia.[4]

Impact of Financial Sector Reforms on Agricultural Growth in Nigeria: A Vector Autoregressive (Var) Approach

The financial sector has witnessed several reforms over the decade. The associated impact of this is also felt in the agricultural sector. The study was carried out to assess the impact of financial sector reforms on agricultural growth in Nigeria from 1970-2009. Secondary data were collected from Central Bank of Nigeria, National Bureau of Statistics and National Population Commission and analyzed using vector error correction model (VECM) approach. The result revealed that financial sector reforms in the baseline and sensitivity model significantly impact on agricultural growth both in the long and short-run. However, the impact of financial sector reforms shock in the sensitivity model on agricultural output growth was lower by 0.60 percent when compared with 78.85 percent in the baseline model. This implied that financial sector reforms could play a significant role in the growth of the agricultural sector by increasing its production level and independently generate positive investments in the sector than in the sensitivity result. It is therefore recommended that government should adopt strong macroeconomic policies targeted to kick-start meaningful growth in the agricultural and financial sectors as well as provide the enabling environment for farming as a business through concessionary interest rates, tax free and import duty concessions. These financial and fiscal incentives when provided would encourage further output growth in the agricultural sector of the country.[5]

[1]  De Janvry, A. and Sadoulet, E., 2010. Agricultural growth and poverty reduction: Additional evidence. The World Bank Research Observer, 25(1), pp.1-20.

[2] Lin, J.Y., 1992. Rural reforms and agricultural growth in China. The American economic review, pp.34-51.

[3] Dorward, A., Kydd, J., Morrison, J. and Urey, I., 2004. A policy agenda for pro-poor agricultural growth. World development, 32(1), pp.73-89.

[4] Siboleka, M., Nyambe, J.M. and Osterkamp, R., 2014. Agriculture and manufacturing sector growth in Namibia during the period 1981 to 2012: A granger causality test. Journal of Economics, Management and Trade, pp.1700-1707.

[5] Akpaeti, A.J., 2015. Impact of financial sector reforms on agricultural growth in Nigeria: A vector autoregressive (VAR) approach. Journal of Experimental Agriculture International, pp.17-35.

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