World Food Policy WFP Volume 4, No. 2, Spring 2018 | Page 51

Facilitating Inclusive Rural Transformation in the Asian Developing Countries
cantly contributed to poverty reduction communes without paved roads. Fan et
in western China (a notably poorer re- al. (2008) further show that the returns
to both income growth and poverty re-
gion overall).
Investment on rural road infra- duction are highest in the public invest-
structure has also gained increasing ment in India.
attention in many Asian developing
countries. Among the countries studied
in this paper, Vietnam and Indonesia
have increased significantly on rural
road investments in the past two de-
cades. Recently, Bangladesh, India and
Pakistan have also paid great attentions
in investing rural roads though lack of
investment during their earlier stage of
development might have constrained
rural transformation and poverty re-
duction. While the Philippines was
one of a few developing countries in
Asia that started to develop its national
transportation in 1960s and 1970s, the
investment has slowed down and faced
the greatest challenges in developing
rural road infrastructure thereafter
(World Bank, 2005). Statistics show that
during 1993 to 2002, expenditures on
the road network in the Philippines as a
share of GDP averaged 1.25%, which is
much lower than that in China (3.6% of
GDP in 2002). It even dropped to only
0.3% of GDP in 2009.
Reforming markets: Market reform
and inclusive rural transformation.
Price and marketing reform in agri-
culture, including trade liberalization,
are the other drivers for inclusive rural
transformation. Market reform reduces
price distortion and allows farmers to
better allocate their land, labor and cap-
ital among crops or between crops and
livestock or fisheries, thereby increasing
their average agricultural productivity.
China and Vietnam, again, are
interesting cases to look at as their mar-
keting reforms are unique and there
are experiences and lessons to learn.
Before 1980s in China and 1990s in Vi-
etnam, government parastatals in both
countries were responsible for purchas-
ing farm output. But since the 1990s,
small-private traders have been buy-
ing a large majority of grains and other
crops, and literally all horticulture and
livestock products (Wang et al., 2009;
Huang and Rozelle, 2006). Overall,
China in the 2000s might be one of the
least distorted, domestic agricultural
economies in the world. Vietnam has
also become highly liberalized since the
early 2000s (Che et al., 2006). Empiri-
cal studies on China confirm a strong
impact of the price and marketing re-
form on output in 1980s (Fan, 1991;
Lin, 1992). Market liberalization has
enabled farmers to gain from increased
allocative efficiency in 1990s (DeBrauw
et al., 2004). China has moved towards
Empirical evidence shows that
government spending on rural roads
have the most significant impacts on ag-
ricultural transformation, off-farm em-
ployment and rural poverty reduction
(Van de Walle, 2002; Fan et al., 2004;
Knox et al., 2013). For example, Glew-
we et al. (2000) show that poor house-
holds living in rural communes with
paved roads have a 67% higher proba-
bility of escaping poverty than those in
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