KNOWLEDGE BASE RESOURCE

Farm-nonfarm growth linkages and the welfare of the poor

Published by: World Bank

Authored by: Hazell, P. | Haggblade, S.

Publication Date: December 1, 1993

The welfare of the poor in most developing countries is linked closely to agriculture. Most of the poor live in rural areas, and they depend on agriculture for their incomes-directly, in the case of farmers and agricultural workers, or indirectly, in the case of self-employed persons and workers engaged in trade, services, agro-processing, and other nonfarm activities that cater largely to rural demands. Several studies have shown that technology-driven agricultural growth can contribute significantly to growth in national income (Adelman 1984; Rangarajan 1982; Cavallo and Mundlak 1982; and Byerlee 1973). A large, if more contentious, body of literature discusses the poverty-reducing effect of technological change (Pinstrup-Andersen and Hazell 1985; Lipton with Longhurst 1989; and Hazell and Ramasamy 1991). Nonfarrn linkages generated by technical change in agriculture can enhance both growth and its poverty-reducing effect. A growing agricultural sector demands nonfarm production inputs, and supplies raw materials to transport, processing, and marketing firms. Likewise, increases in farm income lead to greater demand for consumer goods and services. Besides stimulating national economic growth, these production and consumption linkages affect poverty and spatial growth patterns, particularly when agricultural growth is concentrated on small and medium-size farms (Johnston and Kilby 1975; Mellor 1976; and Mellor and Johnston 1984). Because much of the resulting growth in nonfarm activity occurs in. rural areas and small towns, it can help contain rural-to-urban migration. Moreover, the kinds of nonfarm goods and services demanded by small and medium-size farms are often those produced by small, labor-intensive enterprises, whose growth can contribute to increased employment and income-earning opportunities for the poor. For these reasons, any book on poverty issues would be incomplete without adequate consideration of the indirect, or downstream, benefits of agricultural growth.


Research Detail
Farm-nonfarm growth linkages and the welfare of the poor
Published by: World Bank
Authored by: Hazell, P. | Haggblade, S.
Publication Date: Dec 1st, 1993