Institutions and policies for pro-poor agricultural growth

Global experience with pro-poor growth and empirical work spanning India, Malawi and Zimbabwe demonstrates the importance of agricultural growth for poverty reduction in poor rural areas, while also pointing to the need for complementary non-farm sector growth. Theoretical arguments, historical evidence and livelihoods modelling in poor medium-potential rural economies suggest that, contrary to thinking dominating much of current development policy, subsidies to relieve critical seasonal credit and cash restraints and reduce market and input supply uncertainties need to help in 'kick-starting' agricultural markets if increased smallholder productivity in food-grains is to drive rural non-farm growth. Establishing the base conditions for these to work, designing and implementing them to be effective, and then phasing them out are major challenges facing policymakers. © Overseas Development Institute, 2004.