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Industry Matters for Poverty: A Critique of Agricultural Fundamentalism

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  • Rana Hasan
  • M. G. Quibria
Abstract
We use a recently constructed cross‐country data set on absolute poverty to examine whether there is regional and sectoral variation in the relationship between poverty and economic growth. We find that the poverty‐growth linkage is strongest in East Asia and that this linkage is essentially driven by growth in the industrial sector. By contrast, industrial growth has had little positive impact on poverty reduction in any other region. These findings are consistent with the notion that East Asia's greater success in poverty reduction lies in its greater openness and market orientation, which created a pattern of labor‐intensive industrial growth that led to a rapid growth in employment and poverty reduction. Anhand neuer Länderquerschnittsdaten über absolute Armut untersuchen wir, ob es in der Beziehung zwischen Armut und Wirtschaftswachstum regionale und sektorale Variationen gibt. Wir finden, dass der Zusammenhang zwischen Armut und Wachstum in Ostasien am stärksten ist, und dass diese Verbindung vorwiegend vom Wachstum im industriellen Sektor abhängt. In allen anderen Regionen hatte das industrielle Wachstum wenig positiven Einfluss auf den Rückgang der Armut. Diese Ergebnisse stimmen mit der Vorstellung überein, dass die erfolgreichere Bekämpfung der Armut in Ostasien mit der grösseren Offenheit und Marktorientierung dieser Region zusammenhängt, wo durch Wachstum in arbeitsintensiven Industrien ein schnelles Wachstum der Beschäftigung und dadurch die Verminderung der Armut erreicht wurde. Nous utilisons une base de données transversales de récente construction pour examiner s'il existe des variations régionales et sectorielles dans la relation entre la pauvreté et la croissance économique. Nous trouvons que la relation entre pauvreté et croissance est plus forte en Asie occidentale et que cette relation dépend surtout de la croissance dans le secteur industriel. Par contre, la croissance industrielle n'a guère d'impact positif sur la réduction de la pauvreté dans les autres régions. Ces résultats sont conformes à l'idée que le succès dans la réduction de la pauvreté en Asie occidentale est dûà l'ouverture et l'orientation vers le marché de cette région. Par conséquent on observe une croissance d'une industrie à forte intensité de main‐d'œuvre qui déclenchait une croissance rapide de l'emploi et la réduction de la pauvreté.

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  • Rana Hasan & M. G. Quibria, 2004. "Industry Matters for Poverty: A Critique of Agricultural Fundamentalism," Kyklos, Wiley Blackwell, vol. 57(2), pages 253-264, May.
    • Handle: RePEc:bla:kyklos:v:57:y:2004:i:2:p:253-264
    DOI: 10.1111/j.0023-5962.2004.00253.x
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    References listed on IDEAS

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    1. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
    2. Quibria, M.G., 2002. "Growth and Poverty: Lessons from the East Asian Miracle Revisited," MPRA Paper 2638, University Library of Munich, Germany.
    3. Alvaro Forteza & Martín Rama, 2000. "Labor Market "Rigidity" and the Success of Economic Reforms Across more than One Hundred Countries," Documentos de Trabajo (working papers) 0600, Department of Economics - dECON.
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    Cited by:

    1. Cielito F. Habito, 2010. "Patterns of Inclusive Growth in Developing Asia: Insights from an Enhanced Growth-Poverty Elasticity Analysis," Working Papers id:3076, eSocialSciences.
    2. Hazell, Peter B.R., 2009. "The Asian Green Revolution:," IFPRI discussion papers 911, International Food Policy Research Institute (IFPRI).
    3. Bezemer, Dirk & Headey, Derek, 2008. "Agriculture, Development, and Urban Bias," World Development, Elsevier, vol. 36(8), pages 1342-1364, August.
    4. Nadia Hassan & Atiq ur Rehman, 2021. "Examining the Inter-Sectoral Relationship, Productivity and Inclusive Growth of Pakistani and Indonesian Economies," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 3(1), pages 38-57, june.
    5. Charles B. Moss & Samba Mbaye & Anwar Naseem & James F. Oehmke, 2018. "Did the Plan Sénégal Emergent Affect Cropping Decisions in the Senegal River Basin?," Economies, MDPI, vol. 6(3), pages 1-17, July.
    6. Lee, Yong-Jin Alex & Jang, Seongsoo & Kim, Jinwon, 2020. "Tourism clusters and peer-to-peer accommodation," Annals of Tourism Research, Elsevier, vol. 83(C).
    7. Lavopa, Alejandro & Szirmai, Adam, 2012. "Industrialization, employment and poverty," MERIT Working Papers 2012-081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Sushanta K. Mallick, 2014. "Disentangling the Poverty Effects of Sectoral Output, Prices, and Policies in India," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 773-801, December.
    9. Posada, Carlos Esteban & Trujillo, Edgar, 2008. "Los precios y el impacto de la industria en el crecimiento económico: los casos inglés (1770-1840) y colombiano (1923-1998)," Revista Lecturas de Economía, Universidad de Antioquia, CIE, November.
    10. Krishna, Anirudh, 2006. "Pathways out of and into poverty in 36 villages of Andhra Pradesh, India," World Development, Elsevier, vol. 34(2), pages 271-288, February.
    11. Briones, Roehlano & Felipe, Jesus, 2013. "Agriculture and Structural Transformation in Developing Asia: Review and Outlook," ADB Economics Working Paper Series 363, Asian Development Bank.
    12. Suryahadi, Asep & Suryadarma, Daniel & Sumarto, Sudarno, 2009. "The effects of location and sectoral components of economic growth on poverty: Evidence from Indonesia," Journal of Development Economics, Elsevier, vol. 89(1), pages 109-117, May.
    13. Sadia ABBAS* & M. Masood AZEEM** & Khuda BAKHSH* & Alvina FATIMA* & Abdus SAMIE*, 2014. "POVERTY REDUCTION IN PAKISTAN: The Role of Agricultural and Industrial Subsector’s Growth," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 24(2), pages 143-157.
    14. Ali, Safdar & Ahmad, Khalil & Ali, Amjad, 2019. "Does Decomposition of GDP Growth Matter for the Poor? Empirical Evidence from Pakistan," MPRA Paper 95666, University Library of Munich, Germany.
    15. Valdés, Alberto & Foster, William, 2011. "Agricultural incentives, growth and poverty in Latin America and the Caribbean: cross-country evidence for the period 1960-2005. Did trade liberalization increase the incomes of the poorest?," Documentos de Proyectos 3883, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. Hedtrich, Johannes & Aßmann, Christian & Henning, Christian, 2018. "Key Sectors - Key Policies: Challenges on Estimating and Validating a Policy-Impact Function," Conference papers 332937, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Daniel Suryadarma & Asep Suryahadi, "undated". "The Impact of Private Sector Growth on Poverty Reduction: Evidence from Indonesia," Working Papers 349, Publications Department.
    18. Kailash Chandra Pradhan & Shrabani Mukherjee, 2018. "Examining Technical Efficiency in Indian Agricultural Production Using Production Frontier Model," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 19(1), pages 22-42, March.
    19. Andersson, Martin & Rohne Till, Emelie, 2017. "Between the Engine and the Fifth Wheel: An Analytical Survey of the Shifting Roles of Agriculture in Development Theory," Lund Papers in Economic History 163, Lund University, Department of Economic History.
    20. Quibria, M.G., 2020. "Poverty and Policy in the Developing World: Before and After the Pandemic," MPRA Paper 104240, University Library of Munich, Germany, revised 15 Oct 2020.
    21. Enisan, Akinlo Anthony & Olalekan, Okunlola Charles, 2022. "On the Interaction Between Export Promotion and Agricultural Growth in Poverty Reduction in Nigeria: Empirical Evidence for The Period 1980-2016," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(1), pages 109-135, March.

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