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The contribution of public investment in the agricultural sector to economic growth and rural poverty reduction

A high-level dialogue in Nicaragua based on a prospective analysis










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    Analysis of alternative routes of public investment in agriculture and their impact on economic growth and rural poverty reduction in Nicaragua 2020
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    In the face of the economic downturn that Nicaragua experienced in 2018 and the need for a recovery, the study provides a comparative analysis of how investments in productive infrastructure in different agri-food sectors would impact growth and poverty. The analysis is based on scenarios generated through an economy-wide model representing the Nicaraguan economy and its sectors. The model includes financing constraints and the study explores different financing options for the new investments.
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    Productive public investment in agriculture for economic recovery with rural well-being: an analysis of prospective scenarios for Uganda 2022
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    This study highlights how, through a series of scenarios, public investments promoting agricultural productivity in Uganda could drive growth in agrifood production, with favourable impacts on the economy, on well-being and on poverty, especially in rural areas. Using a modelling tool to represent the Ugandan economy, with its multiple sectors and current fiscal constraints, the study ranked the subsectors of Uganda’s agriculture that, through the productivity impact of public investments representing 0.25 percent of GDP (on average, about 373 billion 2017 Uganda shillings) during the years 2023–2025, will generate the greatest socio-economic benefits, maximizing the cost-effectiveness of the public investments. Generally, economic growth and the welfare of households, as measured by their consumption, will be positively impacted, but the impacts will ultimately depend on the sector that receives the investment, which is shown in a ranking. The agricultural sectors targeted for government investment will increase their output (and food prices will thus fall), and this will stimulate growth in non-agricultural sectors, both by increasing final demand for non-agricultural products and by lowering input prices and fostering upstream processing. Lower food prices will have a significant impact since food represents a relatively large proportion of the consumption basket of poorest households. Furthermore, labour income for rural households will increase with productivity growth, and this will reduce rural poverty. The findings of this study provide important information about the priorities of Uganda’s National Development Plan (NDP) III and vision for agriculture, as well as new priorities to be considered for enabling economic recovery with increased well-being post-COVID-19.
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    Importance of sorghum in the Mali economy: the role of prices in economic growth, agricultural productivity and food security 2018
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    Mali has generated relatively high levels of agricultural growth over the past few decades. While most attention has focused success in cotton, since the early 1990s, staple food production has increased by an annual rate of 2.4 percent, roughly keeping pace with population growth. Most of the production, however, has been through area expansion, which increased at a faster annual pace, 2.0 percent, than the 0.5 percent increase in yields. Studies have found agricultural growth more effective in generating economic growth and reducing poverty than investments elsewhere, including the industrial sector. Mali shares many of the conditions favorable to successful agriculture led growth, including agriculture’s substantial contribution to GDP, a large smallholder population, and poverty concentrated in rural areas. This report investigated the role that sorghum production has played in economic development and poverty reduction in Mali, with a principal focus on how sorghum and similar commodity prices, as proxies to agricultural income, affect economic growth. Findings suggest that while sorghum and other staple food crops contribute to modest rates of economic growth, the lack of commercial marketing opportunities and “cheap food” pricing policy limit agriculture’s growth potential. The artificially low prices paid to Mali’s sorghum producers suppress farm income and constrain the long–term buildup of investment capital needed to adopt more modern and productive technology and management practices. Moreover, the low pricing has aggravated household’s ability to make any meaningful movement out of poverty. Policy needs to move away from pricing mechanisms that artificially maintain low food prices and increase crop research investments in staple food crops so that the large population of rural Malian household engaged in their production become engines of economic growth and bootstrap themselves from poverty.

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