How to end poverty traps in rural areas

More than one-third of the rural population in developing countries lives on less-favored agricultural land, according to global spatial datasets from 2000. How, then, does this distribution influence the incidence of poverty in these countries?

To address this question, our paper “Poverty and the Spatial Distribution of Rural Population” investigates two types of spatial distributions across 83 developing countries over a 10-year period: rural populations on less-favored agricultural lands and in less-favored agricultural areas. Less-favored agricultural lands are constrained by difficult terrain, poor soil quality, or limited rainfall. Less-favored agricultural areas include less-favored agricultural lands plus favorable agricultural land with limited access to markets (i.e. five hours or more travel to a market city with a population of at least 50,000).

Our spatial analysis of the distribution of rural populations across 124 developing countries in 2000 reveals that around 36% (1.31 billion people) were located on less-favored agricultural land, and over 37% (1.38 billion) in less-favored agricultural areas.  About 8% of the rural population (288 million) was concentrated on remote less-favored agricultural lands located far from market centers, which also comprises 22% of all the rural population on less favored agricultural land in developing countries.

Given this evidence confirming that a sizable proportion of the rural population is located on less favored lands and in remote areas, we developed two hypotheses as to how this spatial distribution of rural populations might impact poverty in developing countries.  First, the concentration of rural populations on less-favored agricultural land and areas may have a direct influence on changes in poverty, and second, it may have an indirect influence through attenuating the poverty-reducing impact of income growth.

To test these two hypotheses empirically, we examined how the spatial distributions of rural populations in 2000 influenced poverty changes from 2000 to 2012  in 83 developing countries. While we found little evidence of a direct impact on the spatial distribution of rural populations on changes in poverty, there is a significant indirect influence, in that accounting for the distribution of rural populations on less-favored agricultural lands or areas reduces estimates of the poverty-reducing impact of income growth.  Thus, our conclusion is that, across a wide range of developing countries, as more rural people are located on remote and less-favored agricultural land, the result is a substantial attenuation of the poverty-reducing impact of overall income growth.  That is, the spatial concentration of rural population on marginal and remote agricultural land slows down how much (average) income growth reduces the incidence of poverty in developing countries.

These results lend credence to recent concerns about the prevalence of geographical poverty traps in the rural areas of developing countries. As the 2008 World Bank Development Report (p. 49) has pointed out, “in such a case, reducing rural poverty requires either a large-scale regional approach or assisting the exit of populations.” It may be that both strategies will be required to alleviate the problem of the concentration of rural populations on less-favored agricultural lands and remote areas, which as this paper has shown appears to be a major obstacle to the poverty-reducing effect of overall income growth in developing countries.  In particular, our results suggest that the most critical and vulnerable rural population group are those located on less-favored agricultural lands that are also remote from markets.  It is this group that should be the main target of any strategy aimed at encouraging out-migration while investing in improving the livelihoods of those who remain in such areas.

This article was first published by the World Bank’s Let’s Talk Development blog. Publication does not imply endorsement of views by the World Economic Forum.

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Authors: Edward B. Barbier is the John S Bugas Professor of Economics, Department of Economics and Finance, University of Wyoming. Jacob P. Hochard is a PhD student in Department of Economics & Finance, University of Wyoming.

Image: A man harvests cotton in a field near the village of Yakhak, some 120 km (75 miles) south of the capital Dushanbe, October 10, 2013. REUTERS/Nozim Kalandarov.