Agriculture, Poverty and Inequalities

Lecture # 18

Week 12

Announcements

• Final exam on January 13, 2009

• Guidelines for the exam will be posted on the website before the Christmas break

• Review session on 12 January, 2009

Time: 3 – 5 pmVenue: Emerson 210

• Optional writing requirement deadline: January 13, 2009

Structure of today’s class

• Snapshot of rural Latin America

• Poverty (rural and urban) relative to other regions

• Measuring poverty

• Some recent trends

• Rural, urban, indigenous

• Inequality

Why care?

Measuring inequality

Causes of excess inequality and potential solutions

Snapshot of Rural Latin America

• About 37% of total population live on agriculture

• Dualism: corporate farming and small-scale (peasant) agriculture

• Away from production for local consumption to production for exports

• Commercialization for exports has marginalized peasant farmers

• Peasant poverty persists mostly because poorly defined property rights, lack of access to credit, and inefficiency in the use of land

marginalized indigenous populations, land reforms, social unrest….

Migration from rural sector into the cities exacerbating urban poverty

Poverty in Latin America relative to other regions

Most commonly used poverty measures

Based on the notion a “poverty line”

most commonly used:

1. Head count ratio:

HCR = H/N

2. Poverty gap:

And as of the early 1990s : HDI

A commonly used measure: < $1 or <$2 a day delivers some trends

And incidence of poverty in rural areas considerably higher not just in Latin America

Indigenous populations an important part of the picture

INEQUALITIES

Now, back to the question

• What causes up to 15% excess inequality in Latin America?

- Unequal access to capital (about 1% of the excess in inequality)

- Unequal distribution of natural resources (another 5%)

- Unequal access to education (main factor!)

Recognizing ethical and efficiency problems….

Pro-poor growth policies:

- Sustained Growth

- Decentralization

- Microfinance

- Corporate Social Responsibility

Next class: Brazil on Income Inequalities and Poverty Reduction via PROGRESA/OPORTUNIDADES in Mexico

• Ferreira, Francisco (2004), “Income Inequalities and Economic Development in Brazil”, A World Bank Country Study.

And

• Skoufias, E. 2001. PROGRESA and its Impacts on the Human Capital and Welfare of Households in Rural Mexico: A Synthesis of the Results of an Evaluation by IFPRI. December. International Food Policy Research Institute, Washington, D.C.