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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

Year of publication 2020

Place of publication Rome, Italy ;

Pages 12p.

Author FAO

Publisher FAO ;

Product type Brochure, flyer, fact-sheet

Edition 1

Synopsis (short abstract) In 2018, the government of Nicaragua requested technical assistance from FAO to carry out a prospective analysis of the Nicaraguan economy and the evolution of rural poverty, in the context of the restrictive economic conditions experienced in the country that year. Thus, the FAO Agricultural Development Economics Division (ESA) in Rome, together with the FAO Country Office in Nicaragua (FAONI) and in close coordination and support with the country’s Ministry of Finance and Public Credit (MHCP), the Central Bank of Nicaragua (BCN) and the Ministry of Agriculture (MAG), developed the study “Analysis of alternative ways of public investment and its impact on economic growth, agriculture and poverty reduction in Nicaragua.” This analysis generated quantitative evidence on the impact of agriculture on economic growth and poverty reduction. The results are clear: in all simulated scenarios, it was verified that an increase – by a value of 0.5 or 1 percent of the Gross Domestic Product (GDP) – of public investment in the agricultural sector generates economic growth, which is reflected, among other things, in GDP growth that varies between 0.8 and 3.5 percent annually through 2030 depending on the scenario. Moreover, it is observed that the difference in the total poverty rate in rural areas with respect to the base scenario would range between 0.5 and 2.25 percentage points in the same period, depending on the agricultural investment scenario. With regard to extreme poverty, the difference is projected to be between 0.16 and 0.31 points. The ongoing high-level dialogue and collaboration between FAO and Nicaragua’s economic and fiscal policy-making authorities is an excellent example, which should be replicated elsewhere, of how FAO can influence a country’s public policies.

Language English

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