World Food Policy WFP Volume 4, No. 2, Spring 2018 | Page 44

World Food Policy
duction (Panel A, Figure 4). Indonesia
is an exception, despite of relatively slow
ST than the mean of all countries, the
rate of its rural poverty reduction was
above the average. Timmer (2004) ar-
gues that Indonesia’s long-run pro-poor
growth record is among the best in Asia
due to the country’s efforts to balance
growth and distribution during its ST.
of non-cereals products in agriculture.
Bangladesh, on the other extreme, is in
the early stage of rural transformation
and has the highest poverty rate. But
Cambodia is an exception, it is far from
the fitting trend line (Figure 5, Panel
A), which needs further investigation.
Other countries also support the prem-
ise that the poverty rate decreases with
moving to higher stages of rural trans-
formation. Panel B of Figure 5 further
shows that the faster of rural transfor-
mation within agriculture is associated
with the faster rural poverty reduction.
China, for example, has shown 0.82%
average annual increase in the share of
gross value of non-cereal products and
2.89% average annual reduction in the
poverty rate. The higher speed of ag-
ricultural transformation in Vietnam
and Indonesia is also associated with
the faster reduction of poverty in these
countries. In the Philippines, the rela-
tively small reduction in the poverty
rate is associated with adverse agricul-
tural transformation in the country.
It is worth to note that the nature
of structural transformation and pover-
ty reduction. Panel B of Figure 4 shows
that a higher annual increase in the
share of non-agricultural employment
during structural transformation is as-
sociated with more rapid rural poverty
reduction rate. This relationship sug-
gests the importance of the labor-inten-
sive industrialization in absorbing rural
labor and increasing off-farm income
of rural households and therefore rural
poverty reduction.
3.2. Speeds of rural transformation
and rural poverty reduction
Follow the same approach as that in
structural transformation, we examine
the relationships between the speeds
of rural transformation and rural pov-
erty reduction. On the speed of rural
transformation, we use average annu-
al change in the share of gross value
of non-cereal products. The results are
presented in Figure 5.
One common nature of rural
transformation is the rise of agricul-
tural productivity. Overall, many Asian
countries have experienced high growth
in agricultural labor productivity. As
most of the poor in Asia live in rural
areas and are heavily dependent on ag-
riculture for their livelihoods, agricul-
tural labor productivity is important for
rural poverty reduction (IFAD, 2016).
While not showed here, the results are
similar when we replace the average an-
nual change in the share of gross value
of non-cereal products by the average
annual growth of agricultural labor
productivity in Panel B of Figure 5.
Generally, there is a positive rela-
tionship between the stage or speed of
rural transformation and rural poverty
(Figure 5, Panel A). Malaysia, China and
Thailand, for example, have the lowest
poverty rate in the countries studied as
well as the highest shares of gross value
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