Agricultural Growth and Poverty Reduction in Ethiopia: Review, Analysis and Policy

Building on the findings from the first stage, the report presents the results from the analysis made on the impact of agricultural growth on poverty reduction in the second stage. [...] Notwithstanding the methodological controversy surrounding the appropriate choice of approach1, it suffices to note here that the bottom-line conclusion remains broadly similar in both types of studies: that agricultural growth has been important to foster economic growth and to reduce poverty in much of the LDCs of the world, where the sector constitutes a substantial share of the economy in term. [...] For instance, Cervantes-Goday&Dewbre (2010) argue that both the income and price channels are key in the agriculture-poverty nexus, and the strength of the relationship via these channels is contingent upon the proportion of the poor relying on farming, the size of the price decline, and the structure (output-mix) of agricultural production. [...] In other words, the occupational and spatial (rural) proximity of growth to the poor together with the extent to which the source of growth is linked to the rest of the economy may be far more important than growth per se as far as the impact on poverty is considered. [...] But the combined share of nonagricultural sectors (? ? ) in the overall economy is usually larger than the share of agriculture (? ? ), the implication of which is that the elasticity component in the agricultural participation effect [∈? ] should be sufficiently larger than the elasticity component in the nonagricultural participation effect [∈? ] for the above inequality to hold (Christiaensen.