Rural and agricultural development, more than just GDP growth as shown by the numbers, is the key to eliminating poverty in developing countries, according to a new global study released this month by the International Fund for Agricultural Development (IFAD) today.
The Rural Development Report 2016, IFAD’s flagship publication, characterized itself as “a rallying call” to policymakers and development advocates “to win the global war against poverty.”
“The Rural Development Report marks a change in perspective,” said Kanayo F. Nwanze, President of IFAD, in remarks given at the launch of the report at the Italian Ministry of Foreign Affairs and International Cooperation in Rome on September 16. “It places the rural sector into the bigger picture of the country’s development. It demonstrates the need for a far more comprehensive and holistic approach to the economy to ensure prosperity for millions of rural people. It reinforces IFAD’s view, based on 40 years of experience, that investing in agricultural and rural development means investing in the whole economy.”
The focus on rural and agricultural development is critical, the report stresses, because the incomes of 2.5 billion people worldwide still depend directly on rural small farms which produce 80 percent of food consumed in Asia and sub-Saharan Africa.
“We wanted to look at the changes in the daily life of people, not as an isolated and individual undertaking, but as part of the economic developments of their countries and the rural sector,” explained Paul Winters, Director of IFAD’s Research and Impact Assessment Division in comments included with the report. “We systematically looked at whether economic growth brought about poverty reduction and when increased productivity in the rural sector created more jobs and more opportunities to generate higher incomes for rural people.”
The report specifically looked at the impact of structural transformation (the reallocation of economic activity beyond agriculture to include manufacturing and services) and rural transformation (the diversification of rural incomes and gains in agricultural productivity) on poverty reduction.
Major findings of the study were that countries that transitioned rapidly out poverty started diversification of their economies with the agricultural sector. A large part of the success of agricultural development was also attributed to the expansion of rural finance.
The report placed particular emphasis on the latter point, explaining that two billion people globally have no access to regulated financial services, and that 73 of the world’s poor population do not have bank accounts.
Regionally, the report highlighted the positive impact of land reform and basic investments in rural areas such as farm-to-market roads and agricultural input subsidies in the Philippines, China, India, and Vietnam.
One interesting result the study found, however, that may have some relevance to the Philippines, is that in Central American countries the use of targeted government cash transfers had actually increased rural income inequality.
“Rural transformation is not automatic. It is a choice,” said Nwanze. “The choices made by governments and development practitioners have an enormous impact on the lives of people and nations.”
The report concluded that policies need to be inclusive and must bring poor, and often marginalized, rural people into the economic mainstream so that rural development is socially, economically and environmentally sustainable. This is the only way to achieve the 2030 Agenda for Sustainable Development and eliminate extreme poverty and hunger, the report said.
“The findings are a wake-up call to everyone who cares about the plight of the poorest children, women and men on our planet,” said Nwanze. “Every person, every government and every organization engaged in the battle against poverty should read it and act on its findings.”