Pakistan Research Repository

AGRICULTURAL GROWTH, RURAL POVERTY AND INCOME INEQUALITY IN PAKISTAN: A TIME SERIES ANALYSIS

Saboor, Abdul (2004) AGRICULTURAL GROWTH, RURAL POVERTY AND INCOME INEQUALITY IN PAKISTAN: A TIME SERIES ANALYSIS. PhD thesis, University of Agriculture, Faisalabad.

[img]HTML
23Kb

Abstract

Rural poverty is a complex and multi dimensional phenomenon. It has many faces changing from place and across time, and was illustrated in many ways; either relative or absolute poverty; transient and chronic poverty. The issues of rural poverty and income inequality are difficult to comprehend without through examination of several interrelated aspects of changes in the agriculture sector. The recent analysis of large international and interregional data sets show that the structure of the agricultural growth is a major factor in explaining the bulk of rural poverty reduction. The study in hand is undertaken to frame universally acceptable threshold of poverty, to find out trend analysis of rural poverty and income inequality by employing axiomatic approach, to asses the impact of various factors on poverty status of a household in Pakistan, to develop Poverty Equivalent Growth Rate ( PEGR ) for analyzing the trickle down impact of agricultural growth to the rural poor and to forecast the co-integrated trends of agricultural growth, rural poverty and income inequality. The national and international poverty lines ( in absolute terms ) were estimated for Pakistan by employing nontraditional techniques. The relative poverty lines based on the distribution of 100 % , 75 % , and 50 % of the monthly per capita income and expenditure were also estimated for the years 1990 through 2001. The estimation is quite useful to determine trends in income inequality in the country and provinces. Moreover, the population was decomposed into chronic and transient poor as against the non poor. The clusters of population very close to the poverty lines were significantly increased from 31.53 % to 40.88 %. Thus such a high proportion of the population close to the poverty line calls for policy intervention because a very little effort on the part of the government institutions can check the vulnerability of the transient poor and pulling them of the poverty trap on the other hand. In the axiomatic framework, five poverty indices were estimated incorporating both the national and international poverty lines so as to pick the most appropriate measure for further analysis and policy implications. By developing an axiomatic framework, positive and normative inequality measures were estimated. The results revealed that income inequality is not stable showing wide variation during year 1990 through 2001. All measure of income inequality decreased in the year 1990-91 to 1992-93 and then increased continuously up to the year 2001. Most of the measures provide ambiguous result in the real change of income inequality in the country. The Atkinson Gini Index only provides the actual trend of inequality in rural Pakistan unambiguously. The regression model encompassing the impact of agricultural growth on rural poverty reflects that one percent increase in average household income reduces poverty (HCR) by 0.25 percent at national level. The other regression model encompassing the impact of income inequality on rural poverty showed that the coefficient of elasticity is less than one. Pakistans rural scenario shows that one percent increase in the income inequality, poverty increase by 0.25 percent. The final regression model depicting the interrelationship among agricultural growth, rural poverty and income inequality suggests that one percent increase in income inequality and average income in rural areas of Pakistan leads to an increase in income inequality and average income in rural areas of Pakistan leads to an increase and decrease in poverty at the rate of about 0.31 and 0.27 percent respectively. It indicates that the impact of inequality increasing poverty is a somewhat greater than that of growth in average income in reducing rural poverty. These results vary at the provincial level. Pakistan poverty and inequality statistics were studied for the first time in terms of pro poor growth scenarios. The short term Poverty Equivalent Growth Rate (PEGR) reveals that agricultural growth is anti poor in Pakistan and in all provinces from 1990-91 to 1992-93 and in the subsequent years ( from 1992-93 to 1998-99), showed pro poor growth in rural Pakistan. In this way, the short run PEGR analysis reveals that pro- poor growth scenario is improving in rural Pakistan. If the growth remains pro- poor in the subsequent years as reflected in the year 2000-01, there is likehood that growth trickles down to the poor in more than the non poor. Logit regression provides the probability of occurrence of low and high extent of poverty in rural areas of Pakistan. The findings revealed that there was great likehood of low incidence ( below 20 % ) of rural poverty with the increase in land use intensity, cropping intensity, agricultural growth, education and number of wage earners in a family. On the other hand, with the rise in family size, inflation, rural population, income inequality and un- employment, there is high probability of occurrence of rural poverty in the country. The results of impulse response analysis, which provides a picture of future scenario, indicate that one standard error shock to agricultural growth have negative impact on rural poverty in the subsequent 10-year period. Similarly, one standard error shock in income inequality causes rural poverty to rise up to next 10 years. Finally, the impulse response of poverty revealed that a 10 % increase in poverty would reduce the agricultural income by 2 % and this may continue in the next 10 years. The findings suggest that the government should focus on poverty equivalent growth rate in agriculture rather than the actual growth rates. In order to improve PEGR, the poverty alleviation policy must be in tandem with rational income distribution. There is a need to target public sector development expenditures to particular regions because of having high incidence of poverty. Thus checking vulnerability would offer wide option for the policy makers to settle the issue to the severity of poverty in the future.

Item Type:Thesis (PhD)
Uncontrolled Keywords:Agricultural growth, Rural poverty, Income inequality, Relative poverty, Absolute poverty, Transient poverty, Chronic poverty, Agricultural growth, Poverty Equivalent growth rate, ( PEGR ), Poverty lines, Positive and normative inequality, Land use intensity, Cropping intensity, Agricultural growth, Education, Wage earners, Family size, Inflation, Rural population, Income inequality, unemployment, Poverty alleviation,
Subjects:Agriculture & Veterinary Sciences(a) > Agriculture(a1)
ID Code:96
Deposited By:Mr Ghulam Murtaza
Deposited On:17 Jun 2006
Last Modified:11 Jun 2008 21:42

Repository Staff Only: item control page