Tuesday, 12 November 2013

How China’s agricultural miracle combined economic growth with poverty reduction

This post by Marie-ClaireTuzeneu, Production Manager of the Development Co-operation Report at the OECD, provides a first look on Li Xiaoyun’s piece for the OECD’s Development Co-operation Report 2013. This blog is part of the Wikiprogress series on post-2015.

How China’s agricultural miracle combined economic growth with poverty reduction
A first look at Li Xiaoyun’s chapter in the OECD’s Development Co-operation Report 2013

The world has made an important first step towards ending poverty: successfully reaching the first Millennium Development Goal and halving the proportion of people whose income was less than USD 1.25 per day in 1990. This achievement, frequently cited in this year’s Development Co-operation Report (DCR), would not have been possible without the dramatic poverty reduction that took place in China. In his chapter “What can Africa learn from China’s agricultural miracle”, Professor Li Xiaoyun (Research Center for International Development, China Agricultural University) explores the factors that contributed to this success and what possible lessons Africa could take away from the Chinese experience.

From 1978 to 2008, China’s economy grew at an average of 9.8% while its poverty incidence decreased from 63% to 10%. According to Li, this success was largely driven by growth in smallholder farming.  In fact, agricultural growth was responsible for 35% of China’s overall GDP growth and contributed four times more to poverty reduction than all of China’s manufacturing services combined. Li  attributes the large role agriculture played in its poverty reduction partially to the labour-intensive nature of agricultural work – this allowed the sector to absorb a high amount of China’s unskilled labour based in rural areas.

Based on this experience, he cautions countries against developing policies that encourage a largely rural-based population to migrate to urban areas before certain structural preconditions are met. Instead, Li argues that policies should first focus on expanding and increasing productivity within the agricultural sector. Once farmers are able to produce a surplus, this will then both help lower prices for consumers and provide raw material that will help stimulate other markets.

What specific lessons, then, could African countries draw from China’s experience? Li writes, “Given the diversity of the African continent, one of the most important lessons from China’s experience in agricultural development is the need to adapt to local and regional situations.” He emphasises the importance of carefully examining China’s experience to identify what could work in specific national contexts. With this important point in mind, Li developed a list of key general lessons, including:

  • rapidly increasing productivity and total output for crops already grown by a majority of smallholder farmers through techniques such as multiple cropping, inter-cropping and double and triple harvests
  • linking agricultural surplus with investment opportunities so that increasing farmer incomes also contribute to growth in other sectors
  • transitioning from a crop-focused to a more diversified farming system.

Finally, he critically reflects that China’s path towards rapid economic growth and agricultural production has not been without certain negative side effects that African countries should take into account when developing their own policies and programmes. As DAC Chair Erik Solheim states within the DCR Editorial, “The challenge for Africa will be to avoid some of the negative by-products of the Chinese experience, which include environmental damage and growing inequity between rural and urban areas.”

The Chinese experience on how to reduce poverty, its potential lessons for Africa and the other topics explored in the Development Co-operation Report 2013: Ending Poverty will be discussed in a live panel debate in London on 5 December. For more information, visit the Intelligence Squared event page.

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