Rural Poverty in Developing Countries

• Author: Mahmood Hasan Khan
• Position: Professor of Economics at Simon Fraser University (Burnaby, British Columbia, Canada)

How does rural poverty develop, what accounts for its persistence, and what specific measures can be taken to eliminate or mitigate it?

About one-fifth of the world's population is afflicted by poverty. Poverty is not only a state of existence but also a process with many dimensions and complexities. Usually it is characterized by deprivation, vulnerability (high risk and low capacity to cope), and powerlessness (Lipton and Ravallion, 1995; Sen, 1999). These characteristics impair people's sense of well-being. Poverty can be chronic or transient, but transient poverty, if acute, can trap succeeding generations. The poor adopt all kinds of strategies to mitigate and cope with their poverty. To understand poverty, it is essential to examine the economic and social context, including institutions of the state, markets, communities, and households (families). Poverty differences cut across gender, ethnicity, age, residence (rural versus urban), and income source. In households, children and women often suffer more than men. In the community, minority ethnic or religious groups suffer more than majority groups, and the rural poor, more than the urban poor; among the rural poor, landless wage workers suffer more than small landowners or tenants. These differences among the poor reflect highly complex interactions of cultures, markets, and public policies.

The links among poverty, economic growth, and income distribution have been studied quite extensively in recent literature on economic development. Absolute poverty can be alleviated if at least two conditions are met. First, economic growth must occur-or mean income must rise-on a sustained basis. Second, economic growth must be neutral with respect to income distribution or reduce income inequality. Generally, poverty cannot be reduced if economic growth does not occur. In fact, the persistent poverty of a substantial portion of the population can dampen the prospects for economic growth (Ravallion and Datt, 1999). Also, the initial distribution of income (and wealth) can greatly affect the prospects for growth and alleviation of mass poverty. There is substantial evidence that a very unequal distribution of income is not conducive to either economic growth or poverty reduction. Current experience of economic growth has shown that if countries put in place incentive structures and complementary investments to ensure that better health and education lead to higher incomes, the poor will benefit doubly through increased current consumption and higher future incomes.

The pattern and stability of economic growth also matter. On the one hand, traditional capital-intensive, import-substituting, and urban-biased growth-induced by government policies on pricing, trade, and public expenditure-has generally not been good for alleviating poverty. On the other hand, agricultural growth-where there is a low concentration of land ownership and labor-intensive technologies are used-has almost always helped to alleviate poverty (Gaiha, 1993; Datt and Ravallion, 1998). Finally, sharp drops in growth-resulting from shocks and adjustments-may increase the incidence of poverty; and even when growth resumes, its incidence may not decrease if inequality has been increased by the crisis.

Rural poverty accounts for nearly 63 percent of poverty worldwide, reaching 90 percent in China and Bangladesh and between 65 and 90 percent in sub-Saharan Africa. (Exceptions to this pattern are seen in several Latin American countries in which poverty is concentrated in urban areas.) In almost all countries, the conditions-in terms of personal consumption and access to education, health care, potable water and sanitation, housing, transport, and communications-faced by the rural poor are far worse than those faced by the urban poor. Persistently high levels of rural poverty, with or without overall economic growth, have contributed to rapid population growth and migration to urban areas. In fact, much urban poverty is created by the rural poor's efforts to get out of poverty by moving to cities. Distorted government policies, such as penalizing the agriculture sector and...