Poverty Reduction during the Rural-Urban Transformation: Rural Development is Still More Important than Urbanisation


Based on cross-country panel datasets, we find that (i) an increase in population share in agriculture is associated with poverty reduction once the longer- term poverty change or the dynamic is taken into account; (ii) rural non-agricultural sector also is poverty reducing in some cases; and (iii) increased population in the mega cities has no role in poverty reduction. In fact, the growth of population in mega cities is "poverty-increasing" in a few cases. Given that a rapid population growth or rural-urban migration is likely to increase poverty, more emphasis should be placed on policies that enhance support for rural agricultural and non-agricultural sectors. If our analysis has any validity, doubts are raised about recent research emphasising the role of secondary towns or urbanisation as the main driver of extreme poverty reduction.


Inequality, Poverty, Growth, Agriculture, Non-agriculture

JEL Classification

C20, I15, I39, O13


Katsushi S. IMAI
School of Social Sciences, University of Manchester, UK
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059

Raghav GAIHA

Global Development Institute, University of Manchester, U.K.
Harvard School of Public Health, Harvard University Boston, USA

Alessandra GARBERO
Research and Impact Assessment Division (RIA), Strategy and Knowledge Department, International Fund for Agricultural Development (IFAD), Italy