Rural Development and Poverty Reduction: Is Agriculture Still The Key?

This paper discusses the role of agriculture in development, and examines if agricultural development will help growth and poverty reduction in developing countries. The high correlation between poverty and rurality highlights the importance of rural development. The paper states that:

• Despite income diversification by rural households, those in the lowest expenditure categories have a larger share of agricultural income in their total income than higher income households;
• Balance of entry points for rural development and poverty reduction will change as food systems change, potentially resulting in a decline in role of agriculture;
• Labor share of agriculture, however, declines at a slower rate than share of agriculture in national GDP;
• Decline in agriculture may be accompanied by increase in rural poverty, unless policies to foster agriculture are put in place;
• Shift in food system will result in higher requirement for skills and technology in agriculture.

Finally, the paper examines the effect of market integration and globalization on traditional agriculture. It states that public policy has a significant role in enabling smallholders leverage the opportunities.