Only targeted policies focused on rural people will eliminate poverty in developing countries, concludes new report

Economic growth is not enough to save those threatened daily with starvation. Governments need to tailor policies and investments to transform rural areas in developing countries if they want to eliminate poverty, according to a new global study released by the International Fund for Agricultural Development (IFAD) today.

The Rural Development Report 2016, IFAD’s flagship publication, is a rallying call to policymakers and development practitioners to win the global war against poverty. It brings together leading thinkers to analyse the experiences of rural development in over 60 developing countries. This extensive research provides a solid foundation on which leaders and institutions can base their policy choices and investments.

“The Rural Development Report marks a change in perspective,” said Kanayo F. Nwanze, President of IFAD, prior to the launch of the report at the Italian Ministry of Foreign Affairs and International Cooperation in Rome today. “It places the rural sector into the bigger picture of the country’s development. It demonstrates the need for a far more comprehensive and holistic approach to the economy to ensure prosperity for millions of rural people. It reinforces IFAD’s view, based on 40 years of experience, that investing in agricultural and rural development means investing in the whole economy.”

The focus on rural and agricultural development is critical, states the report, because the incomes of 2.5 billion people worldwide still depend directly on rural small farms which produce 80 per cent of food consumed in Asia and sub-Saharan Africa.

The report is set in the context of a rapidly changing world, with growing demand for food, increased migration to cities and the impact of climate change and environmental degradation. It provides insight into regional and country-specific challenges and historical legacies and how factors like employment, youth populations, rights to land, access to finance, gender equality and social protection influence successful interventions.

The report’s researchers identify four models of rural economic development according to the speeds of economic transformation and inclusiveness, and the objectives of their rural development processes. This systematic and rigorous analysis of the rural sector gives a greater understanding of what key investments and policy reforms should be prioritized so that rural people, and society at large, can benefit.

“We wanted to look at the changes in the daily life of people, not as an isolated and individual undertaking, but as part of the economic developments of their countries and the rural sector,” explained Paul Winters, Director, Research and Impact Assessment Division, IFAD. “We systematically looked at whether economic growth brought about poverty reduction and when increased productivity in the rural sector created more jobs and more opportunities to generate higher incomes for rural people.”

The report specifically looks at the impact of structural transformation (the reallocation of economic activity beyond agriculture to include manufacturing and services) and rural transformation (the diversification of rural incomes and gains in agricultural productivity) on poverty reduction.

Some of the report’s findings include:

• The majority of countries that have sustained a rapid transition out of poverty diversified their economies and advanced their agricultural sectors.
• Creating rural jobs is now just as important as spurring growth.
• Rural transformation is an integral part of a country’s economic development.
• Agriculture remains vital for economic development regardless of the stage of structural transformation. Leaders need to expand and deepen the agriculture-based rural economy with investments in developing modern agro-industries.
• The availability of finance and financial services is critical to the long-lasting transformation of rural livelihoods, yet 2 billion people globally have no access to regulated financial services and 73 per cent of poor people do not have bank accounts.

Some of the report’s regional findings include:

• Bolivia, Colombia, Ecuador, Mexico and Uruguay reduced rural income inequality, even as it increased in most Central American countries partly due to targeted government cash transfers.
• In China, India, the Philippines and Viet Nam, land reform, basic investments in rural areas and other sectoral policies have been decisive factors in rural transformation.
• Most African countries continue to wrestle with a growing youth population, small and declining manufacturing sectors, and deeply entrenched development barriers. Recent increases in agricultural productivity came not from advancing technology, but from bringing more land under cultivation.
• In the Near East & North Africa sub-region (NENA), rural transformation pathways have been adversely affected by instability and fragility. This has been compounded by structural issues related to scarcity of water and the youth bulge.

“Rural transformation is not automatic. It is a choice,” said Nwanze. “The choices made by governments and development practitioners have an enormous impact on the lives of people and nations.”

The report concludes that policies need to be inclusive and must bring poor, and often marginalized, rural people into the economic mainstream so that rural development is socially, economically and environmentally sustainable. This is the only way to achieve the 2030 Agenda for Sustainable Development and eliminate extreme poverty and hunger.

“The findings are a wake-up call to everyone who cares about the plight of the poorest children, women and men on our planet,” said Nwanze. “Every person, every government and every organization engaged in the battle against poverty should read it and act on its findings.”