Structural Change of Rural Economies and Globalization

Structural Change of Rural Economies and Globalization

Main hypotheses

2

Rural households do adapt through diversified activity and income strategies which are reshaping rural economies

Global agro-food markets restructuring reinforce

rural economies’ differentiation

Marginalization trends resulting from these processes of structural change could lead to risks of transitional dead-ends

General Design

Not an assessment / forecast / foresight: “only an update”!!

A 3-year comparative program implemented in 7 countries Mexico Kenya, Madagascar, Mali, Senegal Morocco, Nicaragua

Two main phases: Phase 1 : general country overviews Phase 2 : Regional case studies + value chains reviews +

rural household surveys 26 regions, near 9,000 surveyed HH A focus on rural incomes

National teams: Institutional & Operational partners Contribution to the local policy debate 3

Agriculture for Development

World Development Report 2008

The WDR08 and the three worlds of agriculture

5

AZE

BDI

BEN

BFA

BGD

BGR

BLR

BOLBRA

CHLCHN

CIV

CMR

COL

DOM

ECU

EGY

ETH

GHA

GTM

HND

HUN

IDNIND

IRN

KEN

KHM

LAO

LKAMAR

MDG

MEX

MLIMOZ

MWI

NERNGA

NPL

PAK

PER

PHL

POL

PRY

ROM

RUS

RWA

SEN

SLV

THA

TJK

TUN

TUR

TZA

UGA

UKR

UZB

VEN

VNM

YEM

ZAF

ZMB

AGO

ARG

CZE

DZA

GIN

MYS

PNG

SDN

SVK

SYR

TCD

TGO

ZAR

ZWE

-0.2

0.0

0.2

0.4

0.6

0.8

0.0 0.2 0.4 0.6 0.8 1.0

Ag

ricu

lture

's c

on

trib

utio

n to

gro

wth

, 19

90-2

005

Rural poor/total poor, 2002

Poverty data from Ravallion et al. 2007

Other predicted poverty data

Dynamic analysis

Urbanized countries

Agriculture-based countries

Transforming countries

70-75

90-96

Indonesia (1970-96)

Brazil (1970-96)

India

China(1981-2001)

The Evolutionary Path

AGO

ARG

AZE

BDI

BEN

BFA

BGD

BGR

BLRBOL

BRACHL

CHN

CIV

CMR

COL

CZE

DOMDZAECU

EGY

ETH

GHA

GINGTMHND

HUN

IDN

IND IRNKEN

KHM

LAO

LKA

MAR

MDG

MEX

MLI

MOZMWI

MYS

NER

NGA

NPL

PAK

PER

PHL

PNG

POL

PRY

ROM

RWA

SDN

SEN

SLV

SVK

SYR

TCD

TGO

THA

TJK

TUN TUR

TZA

UGA

UKR

UZB

VEN

VNMYEM

ZAF

ZAR

ZMB ZWE

AGO

ARG

AZE

BDI

BEN

BFA

BGD

BGR

BLR

BOL

BRACHL

CHN

CIV

CMR

COL

CZE

DOM

DZAECU

EGY

ETH

GHA

GIN

GTM

HND

HUN

IDN

IND

IRN

KEN

KHM

LAO

LKA

MAR

MDG

MEX

MLIMOZMWI

MYS

NER

NGA

NPL

PAK

PER

PHL

PNG

POL

PRY

ROM

RWA

SDN

SEN

SLV

SVK

SYR

TCD

TGOTHA

TJK

TUN

TUR

TZAUGA

UKR

UZB

VEN

VNM

YEM

ZAF

ZAR

ZMB

ZWE

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Sha

re o

f G

DP

and

lab

or i

n ag

ricul

ture

GDP per capita, 1990-2005 (constant 2000 US$)

Share of GDP from agriculture

Share of labor in agriculture

400 1800 810090 150 245 670 1100 3000 4900log scale

China 1961-2003

Nigeria 1961-2003 Brazil 1961-2003

The policy diamond and the 3 exit pathways

Pre-conditions:Socio political context

GovernanceMacro fundamentals



3Improve livelihoods in subsistence agriculture

and low-skill rural occupations



Pathways out of poverty:

farming, labor, migration

Transition to market


Demand for agricultural and nonfarm products

Demand for agricultural products

4Increase employment in agriculture and the rural

nonfarm economy


nonfarm economy

1Improve market access; establish efficient value

chains


chains

2Enhance smallholder

competitiveness; facilitate market entry



Income effects Income effects









Pathways out of poverty:

farming, labor, migration



Demand for agricultural and nonfarm products

Demand for agricultural products


nonfarm economy


nonfarm economy


chains


chains





Income effects Income effects

Exple: Agriculture-based Countries

3Securing livelihoods and

food security of subsistence farmers



4Facilitate labor mobility

and rural nonfarmdevelopment



1Building markets and

value chains


value chains

2Smallholder-based revolution; promote

exports


exports










value chains


value chains


exports


exports

What do these 3 exit pathways mean?

Between the Ag. Specialization, rural diversification, and migration options what are the realistic / acceptable / viable /sustainable ones? What are the right shares?10/20/70 or 40/40/20?

=> What is the room for maneuver of the policy makers?

What do we learn from the past?

The structural transformation of Western Europe and its offshots is embedded in Western imperialism [Bairoch, Braudel, Pomeranz, Chang, etc.] The capture of America and domination of

Western Europe during 5 centuries helped its structural transformation: specialization and migrations

The transformation of the so-called “emerging” countries occurred during the “nation state led period” [between the 2 WW => the 2nd globalization]

Where are the Ag. Based countries, what do they face, what can they do?

The Ag. based countries [mainly SSA] face huge challenges: An incipient economic transition

Structural Change: East Asia vs SSA

0

10

20

30

40

50

60

1965 1970 1975 1980 1985 1990 1995 2000 2005

China Indonesia Thailand Sub-Saharan Africa

0

10

20

30

40

50

1965 1970 1975 1980 1985 1990 1995 2000 2005

Sub-Saharan Africa

Manufacturing % GDP

Agriculture % GDP

Where are the Ag. Based countries, what do they face, what can they do?

The Ag. based countries [mainly SSA] face huge challenges: An incipient economic transition

An incomplete demographic transition

-15

-10

-5

0

5

10

15

20

25

30

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

La

bo

r Fo

rce

Inc

rea

se

(mill

ion

s)

Year

Eastern Asia Europe Latin America and the Caribbean South-Central Asia Sub-Saharan Africa

Yearly Cohorts

MADAGASCAR - Croissance annuelle de la population active

0

50

100

150

200

250

300

350

400

450

500

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

Rural total ratio d'activité

population active rurale 2009 - 2019 = + 2,6 milllions

Where are the Ag. Based countries, what do they face?

The Ag. based countries [mainly SSA] face huge challenges: An incipient economic transition An incomplete demographic transition

The constraints of climate change In the context of globalization:

High international competition One size political framework

These challenges are insufficiently considered:

=>it represents a historically unique configuration

What can they do?

Back to the 3 exit pathways… And back to rural realities of the Ag.based

countries… Þ Here some RuralStruc results can help:

The overall conclusions: Huge heterogeneity But… “sobering results”

Annual Income per Capita in the Surveyed Regions ($PPP 2007)

0

1,000

2,000

3,000

4,000

Tom

inia

n

Kou

tiala

Dié

ma

Mac

ina

Cas

aman

ce

BA

Nor

d 1

BA

Sud

Hau

t D

elta

BA

Nor

d 2

Bas

Del

ta

AN

tsira

be 2

Ala

otra

1

Mor

onda

va

Itasy

Ant

sira

be 1

Ala

otra

2

Bun

gom

a

Nya

ndo

Nak

uru

Nor

th

Cha

ouia

Saï

ss

Sou

ss

Muy

Muy

Ter

rabo

na

La L

iber

tad

El V

iejo

El C

uà

Teq

uisq

uia

pan

Sie

rra

S.M

arta

Tie

rras

Baj

as

Mali Senegal Madagascar Kenya Morocco Nicaragua Mexico

GDP per Capita 1$ 2$

$PPP 1 Income Classes

0%

10%

20%

30%

40%

50%

60%

70%

% o

f HH

Madagascar

Income classes($ PPP per day)

0%

10%

20%

30%

40%

50%

60%

70%

% o

f HH

Kenya

Income classes($ PPP per day)

Quintiles of Households by Region ($PPP 2007)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q5

Bungoma Nyando Nakuru North

Global Annual Income per capita $ PPP

HH Quintiles

KENYA

Tom

inia

n

Die

ma

Kouti

ala

Maci

na

Casa

mance

BA

Nord

1

Ba S

ud

Haut

Delt

a

BA

Nord

2

Bas

Delt

a

Ants

irabe 2

Ala

otr

a 1

Moro

ndava

Itasy

Ants

irabe 1

Ala

otr

a 2

Bungom

a

Nyando

Nakuru

Nort

h

Chaouia

Sais

s

Souss

Muy M

uy

Terr

abona

El V

iejo

La L

iberd

ade

El C

ua

Tequis

quia

pan

SSM

Tie

rras

Baja

s

0

5000

10000

15000

20000

25000

30000

KCal per EqA per Day by Region and Quintile

Q1 Q2 Q3 Q4 Q5

Structure of Households’ Global Income

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

To

min

ian

Ko

utiala

Dié

ma

Macin

a

Casam

ance

BA

No

rd 1

BA

Sud

Haut

Delta

BA

No

rd 2

Bas D

elta

Ants

irab

e 2

Ala

otr

a 1

Mo

rond

ava

Itasy

Ants

irab

e

1

Ala

otr

a 2

Bung

om

a

Nyand

o

Nakuru

N.

Chao

uia

Sais

s

So

uss

Muy M

uy

Terr

ab

ona

El V

iejo

La L

ibert

ad

El C

uá

Teq

uis

.

Sie

rra S

M

T B

aja

s

Mali Senegal Madagascar Kenya Morocco Nicaragua Mexico

Inco

me S

ou

rces i

n $

PP

P p

er

Ho

useh

old

Rents Remittances Public Transfers Self-Employment Non agricultural Wages Agricultural Wages On Farm Income

Livelihood Strategies in the surveyed regions (WDR08's Typology)

Farm-oriented HH

Labor-oriented HH

Migration-oriented HH

Diversified HH

N

Tominian 155 55.5 0.6 1.3 42.6

Koutiala 153 85.6 0.0 0.7 13.7

Diéma 148 44.6 1.4 8.1 45.9

Macina 154 81.2 1.9 0.6 16.2

Casamance 239 51.5 9.2 0.0 39.3

BA Nord 1 111 15.3 35.1 0.0 49.5

BA Sud 252 21.0 22.6 2.0 54.4

Haut Delta 61 41.0 18.0 1.6 39.3

BA Nord 2 113 17.7 16.8 1.8 63.7

Bas Delta 121 21.5 19.8 0.8 57.9

Antsirabe 2 303 29.7 3.3 0.3 66.7

Alaotra 1 385 41.8 19.5 0.5 38.2

Morondava 506 63.2 3.2 0.6 33.0

Itasy 503 40.2 5.0 0.4 54.5

Antsirabe 1 206 65.0 2.9 0.0 32.0

Alaotra 2 115 60.9 11.3 0.0 27.8

Bungoma 299 44.5 19.1 0.0 36.5

Nyando 285 24.6 31.2 1.1 43.2

Nakuru North 289 17.6 26.6 0.0 55.7

Chaouia 228 44.3 20.6 7.0 28.1

Saïss 261 80.5 2.7 3.8 13.0

Souss 240 44.6 24.6 8.8 22.1

Muy Muy 299 51.2 22.7 7.0 19.1

Terrabona 281 57.3 16.7 6.8 19.2

El Viejo 288 43.1 31.9 4.9 20.1

La Libertad 290 57.2 18.6 0.3 23.8

El Cuá 300 85.3 2.7 0.0 12.0

Tequis. 364 4.1 81.3 4.1 10.4

Sierra SM 175 8.0 12.6 1.1 78.3

Tierras Bajas 145 20.0 16.6 2.8 60.7

7269

Madagascar 1993 (*) 2653 59.4 9.5 1.4 29.6

Nicaragua 2001 (*) 1839 18.9 48.2 0.9 32.0

Mexico

Kenya

Nicaragua

Morocco

Madagascar

Senegal

% of of rural HH in each group per surveyed region

Mali

What does it mean?

“If we want to eradicate hunger…”

“We” to need to deal with “the many”: family farms /smallholders because exits are limited…

The are no “market solutions only”: Under $2 a day: no investment capacity Need of public support: public goods - of

course - but not only

What does it mean? A need to focus first on food crops:

Food insecurity remains and rural households are risk adverse

Food crops are the most inclusive… Then upgrade the added value: ag.

diversification… transformation… And keep in mind that rural diversification

starts with the growing rural demand=> Ag. Income remains a key

Documents

Structural Change of Rural Economies and Globalization