Poverty dynamics in rural Kenya and Madagascar
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Date
2004-10Author
Barret, Christopher B
Marenya, Paswell P
McPeak, John
Minten, Bart
Muriithi, Festus
Oluoch-Kosura, Willis
Place, Frank
Randrianarisoa, Jean C
Rasambainarivo, Jhon
Wangila, Justine
Type
Working PaperLanguage
enMetadata
Show full item recordAbstract
DESPITE TWO DECADES OF MARKET-ORIENTED REFORMS
throughout much of sub-Saharan Africa, poverty rates
increased, and the sense has spread that the “Washington
Consensus” approach of getting macroeconomic policy
and prices “right” does not suffice to stimulate broadlybased
growth and reduce poverty. If the theory that
spawned the “getting prices right” strategy is inadequate
in explaining persistent poverty and prescribing policies to
reduce poverty, then perhaps other theories of economic
growth can suggest more appropriate intervention strategies.
Prevalent macroeconomic growth theories are characterized
by three different hypotheses, which have
analogues at the household level. The “convergence”
hypothesis, which led to the “getting prices right” strategy,
posits that the poor enjoy higher marginal returns to
productive assets than do the rich, so capital naturally
flows disproportionately to the poor, enabling them to
catch up economically. Shocks cause merely temporary
setbacks. The “conditional convergence” hypothesis
holds that individuals within identifiable groups converge
to a group-specific standard of living. Geographic poverty
traps represent a type of conditional convergence
wherein some groups defined by physical location
converge to a standard of living that falls below the
poverty line. Members of these groups need targeted
assistance to stimulate productivity growth. Even among
the poorest, accumulation and recovery from shocks
occur, albeit only to low levels.
The “poverty traps” hypothesis holds that individual
wellbeing depends fundamentally on initial conditions.
Two otherwise identical neighbors will have radically
different experiences if one starts with sufficient land,
livestock and human capital, while the other lacks the
minimum initial stocks necessary to accumulate wealth
over time, or else suffers a serious shock like illness or
loss of livestock. Poorer households earn lower expected
returns on their assets than do wealthier households.
Regions of locally increasing returns to assets can only
exist in the presence of some mechanism that excludes
some people from choosing more remunerative livelihoods.
Typically, exclusion occurs through restricted
access to the credit or insurance necessary to build
assets through investment or protect them against loss,
respectively, or through socially-exclusionary processes
that limit access by certain groups or individuals to
preferred employment, credit or land.
This research represents a micro-level attempt to
empirically test the hypotheses of economic growth by
examining risk management, marginal returns on productive
assets, and asset dynamics across settings distinguished
by different agroecological and market access conditions.
Citation
Barret, C. B(2004). Poverty dynamics in rural Kenya and Madagascar. Basis brief No. 24.Publisher
Department of Agricultural Economics, University of Nairobi, Kenya
Description
Collaborative Research Support Program
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- Faculty of Agriculture [225]