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Abstract

It is often repeated that raising agricultural productivity in developing countries improves the living standards of poor people. Although this proposition seems reasonable it is usually based on casual theorizing, seldom backed by solid empirical evidence. Agricultural productivity growth clearly generates new income and these benefits must accrue to someone. But to what extent do the poor actually share in these benefits? Is it possible that most, or even all of the benefits flow to others, say to non-poor landowners? Using Thai data, regressions were performed to test the null hypothesis that agricultural productivity growth had no impact on changes in the level of rural poverty incidence. The dependent variable was the annual change in the level of rural poverty incidence, the latter expressed as the percentage of the rural population with real incomes below the poverty line, over the time interval concerned. Agricultural productivity entered the regressions as the annual rate of change in the level of agricultural productivity in the region concerned, over the same time interval as the poverty observations, but lagged one calendar year. The estimated coefficient on the change in agricultural productivity was negative and highly significant. The negative sign means that higher rates of agricultural productivity growth cause rural poverty incidence to decline, holding other variables constant. The estimated coefficient on the price of food was positive and highly significant. The positive sign means that higher prices of food relative to non-food cause rural poverty incidence to increase, holding other variables constant.

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