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.

Eradicating Extreme Poverty - But How do we Measure it?

This post by Emma Samman of the ODI,  profiles the ODI's Development Progress Debate on how to measure poverty within the post-2015 framework and is part of the Wikiprogress post-2015 Series.

ODI’s Development Progress project has just kicked off a debate over how a post-2015 framework ought to measure poverty AND you are invited to join the discussion  - with a blog by Martin Ravallion arguing that a new poverty target should continue to be based on a $1.25 a day poverty line alongside a ‘weakly relative’ poverty line, so that absolute poverty is given primacy but relative poverty is also taken into account.

Further contributions will argue for:

• higher international poverty lines (Lant Pritchett),
• a focus on internationally coordinated national poverty lines (Stephan Klasen),
• a poverty measure that includes both the headcount and depth of multidimensional deprivation (Sabina Alkire), and
• a focus on relative poverty that distinguishes across different types of poor people (Amanda Lenhardt and Andrew Shepherd).

Blogs will be uploaded every few days throughout May, so watch the site!

Context

Despite a great deal of debate over what a post-2015 framework should encompass, there is a general consensus that ‘eradicating extreme poverty’ should continue to be a fundamental tenet. Less agreement prevails over how this ought to be measured. The MDG target sought to halve extreme poverty over 25 years and defined the poor as those living on $1 a day or less (later updated to $1.25) in international dollars adjusted for Purchasing Power Parity (PPP).  The $1.25 measure is the average poverty line among the world’s fifteen poorest countries, and the PPP adjustment is designed to enable comparison of purchasing power across countries and over time. One dollar (PPP) in Madagascar should, in principle, have the same value as one dollar in Indonesia.

But it is not clear that this is the best way to think about and measure poverty. Some have advocated higher international income poverty lines, arguing that they hold greater meaning in rich and poor countries alike. Others have argued that PPP measures may not reflect national incomes well and that national poverty lines would offer a better solution. Others still have taken issue with an income-based poverty metric and argued that poverty should be measured in a multidimensional fashion. And it has been reasoned that measures ought to disaggregate across groups of the poor in the view that not all experience poverty equally. 

Make sure your voice is heard, join the debate, either by proposing a blog advocating a particular measure or by commenting on the proposals being advanced.

Please direct your contributions to Development Progress Communications Officer, Katy Harris, at katy.harris@odi.org.uk.

Exploring New Approaches For Poverty Reduction

As the Global Forum on Development (GFD) 2013 draws closer, Cameroonian blogger Julia Owono of Global Voices has written about recent online exchanges on poverty reduction, including a TEDx talk in Mongolia and the ongoing online discussion in preparation for the GFD.

The quest is on for solutions to poverty reduction with the approach of the 2015 deadline for the UN Millenium Development Goals (MDG). Many organizations are exploring new avenues for answers, hoping it can lead to fresh ideas. Among the goals agreed to by the international community more than a decade ago was to halve the number of people suffering from hunger, and for the world's poorest citizens to gain productive employment. Most of the targets are far from being met in most countries, but progress has been made, for instance in Sub Saharan Africa where the proportion of people living on less than USD 1.25 a day declined from 58% to 51% between 1990 and 2005.

Ideas exchange on the internet

The Organisation for Economic Co-operation and Development (OECD) will hold their annual Global Forum on Development in Paris on April 4-5, 2013. This year, the OECD is exploring more inclusive approaches to tackle the poverty issue by inviting to anopen pre-forum discussion online with OECD scholars. All the main conversation topics on the agenda are laid out for everyone to see and contribute.

Another interesting approach to online ideas exchange is hosted by Concerned African Scholars, an organization of scholars and students of Africa. Among the many issues explored is the impact of the hundreds of billions of dollars flowing illicitly out of Africa on the slow progress of poverty reduction. The author, Janvier D. Nkurunziza, suggests one key to bringing down poverty would be "the repatriation of the resources which are currently held abroad and not benefiting the continent."

Had Africa had not lost so much resources in the form of illicit financial transfers, it is likely that poverty would have been less acute. The logic is that keeping these resources in Africa would have produced higher rates of investment, allowing African countries to invest in productivity enhancing sectors such as infrastructure, creating jobs, and raising incomes, resulting in lower levels of poverty.

In a TEDx talk in UlaanBataar, Mongolia on "Social Media and Poverty Reduction" in September 2012, Robert Reid, the Resident Country Director of the Millennium Challenge Corporation in Mongolia, highlighted the necessity of a broad public participation in poverty reduction projects, stressing the importance of private sector involvement for sustainable development. "It's important that the involvment of the private sector be considered at the beginning of discussions on how to reduce poverty," he says.

This multistakeholder approach is also a key tenet of the open data movement, which is progressively penetrating the development sphere. The Uganda Open Development Partnership Platform, a civil society organization-led public initiative, is an example of what open data could bring to the debate on poverty reduction:

Open development is where organisations are using information technologies, among other information sharing channels, to provide and share information. Open development enhances transparency and accountability about resources that are available to be invested in development, how those resources are invested and what results they achieve. In the end, all the stakeholders involved in this information sharing chain; the data owners and users benefit from this mutually reinforcing ecosystem‌

By Julie Owono

This blog first appeared on the OECD Global Forum on Development 2013 site, here.

Discussion questions

The past two decades has seen decreases in both the number of people living in absolute poverty and the rate of poverty in the developing world. This has resulted in part from rapid economic growth, but also from the adoption of active poverty reduction policies, in particular in the framework of the MDGs.

Even though the objective of reducing poverty remains a priority, other social goals need to be tackled today. In this respect, by focusing on three complementary dimensions – social inclusion, social capital and social mobility – social cohesion represents an important challenge for policy makers. While the adoption and rapid propagation of institutional innovations – such as conditional cash transfers, employment guarantee schemes and social savings accounts – have helped to alleviate poverty in many developing countries, they have also contributed to creating fragmented social systems, which can deepen divisions in society.

Questions

1.  What should be the priorities of a renewed social cohesion agenda?
2. What policy mix best addresses the multi-dimensional nature of social cohesion?
3. What institutional innovations have enhanced the social inclusion and mobility of vulnerable and discriminated populations?
4. Is the implementation of universal social programmes achievable in developing countries?

The OECD Global Forum would like to hear your opinions the above. Click here to discuss

Social cohesion: making it happen

Today’s post originally appeared on the OECD Insights Blog and is from Anne-Lise Prigent, editor in charge of development publications at OECD Publishing

A famous Deng Xiaoping quote goes : “Let some people get rich first”. Yet, in Spring 2011, the Beijing city authorities banned all outdoor advertisement of luxury goods on the grounds that they might contribute to a “politically unhealthy environment”.

The trouble with growth is that inequalities tend to rise with it. Growth does not necessarily translate into better life satisfaction – far from it, as the experience of Thailand or Tunisia shows. What happens when the fruits of growth are not shared, when people feel that income inequalities are rising and food prices soaring? Well, that’s when the so-called “politically unhealthy environment” sets in.

Millions voiced their frustration during the Arab Spring. From Tahrir square to the streets of Tunis, a huge emerging middle class showed that it has a tremendous capacity to mobilize people. It demands governments that are open and transparent, as well as more and better services. How can governments answer these demands? How can they go about redistributing the fruits of growth?

A new policy agenda is needed: one that focuses not only on growth but also on openness, fairness and inclusion. Social cohesion needs to be at the centre of policy making. Failing this, we may (re)enter a vicious circle where inequalities create a sense of injustice, which in turn can lead to (mass) protest and sometimes violence. As a result, social peace and stability, as well as long-term growth, may be jeopardized.

How can governments foster social cohesion? Perspectives on Global Development: Social Cohesion in a Shifting World from the OECD Development Centre, answers this. With this latest report, the Development Centre again proves that it is engaged with the world we live in, whether discussing tax revenues or the merits of football as a factor of social cohesion: having a sense of community can make a difference. That, along with equality of opportunities is what social cohesion is all about.

The report first shows how the world has undergone a shift of historical significance over the past decade, with the centre of economic gravity moving towards the East and South. The figures speak for themselves: in 2000, OECD countries represented around 60% of global GDP but by 2010 this was down to 51%, and it will be only 43% by 2030. In fast-growing economies, per capita growth rate was more than double that of high-income OECD countries over the last decade.

It is precisely this shifting wealth that opens a window of opportunity for development and social cohesion. In fast-growing economies, fiscal revenues rose from 20% of GDP on average in 2000 to 27% in 2008. These countries now have the (fiscal) resources to finance social policies that can make the difference – or, can they?

This report argues that public policies can make a difference. OECD countries with initially high income inequalities manage to redistribute income through taxes and transfers. The challenge is to leave no one behind. A cohesive society reduces inequality between groups and ensures that all citizens – the poor, the middle-earners, and the rich – are socially included.

Over the last decade, hundreds of millions of people were lifted out of poverty. This report argues that the emerging middle class should not be ignored either. Today, nearly 1 billion out of the 2 billion people living on 10 to 100 dollars a day in the world – the global middle class – live in fast-growing countries. This number is projected to exceed 3 billion in 2030.

The emerging middle class is a critical economic and social actor because of its potential as an engine of growth, particularly in the largest developing countries such as China and India. Its contribution to social cohesion can be high, and its expectations are sharply rising. What is needed is a social contract between citizens and the state, which entails more and better services in exchange for paying taxes. This would foster a virtuous circle that boosts social cohesion as well as growth. Citizens are more willing to pay taxes in societies where they feel a sense of belonging. Fiscal policy is thus a good place to start.

As the report highlights, fiscal, social and employment policies should go hand in hand. With recent innovations in social protection, the poorest are covered by social assistance and the wealthy by either contribution-based or private alternatives. Yet, a considerable number of (informal) middle-class workers are stuck in the uncomfortable “missing middle” of coverage. More comprehensive social protection systems should protect all sections of the population.

Stronger labour market institutions are also needed. They should aim to create more “good” jobs and reduce the duality in labour markets – between standard and non-standard contracts or between formal and informal workers. This will be critical in reducing inequalities and fostering social cohesion.

A series of cross-cutting issues have to be addressed coherently as well, including education, gender equality, food policy, the integration of immigrants, and institutions.

As Albert Einstein once said, “Reality is merely an illusion, although a very persistent one”. Ignoring people’s desires and the reality in which they live is perilous. Technocratically good policies that do that just won’t work and giving space to dissenting voices is essential to the creation of a sustainable, socially cohesive society.

Social cohesion is a means for development as well as an end in itself. What if social cohesion were the 21^st century’s holy grail? A holy grail that can only be attained with some long-term vision and commitment – and a smile. Failing that, there might be rough times ahead.

Useful links

Social cohesion on Wikiprogress

OECD Development Centre

2012 年全球发展前景：转变中世界的社会凝聚力