Table Of ContentRural Poverty in Latin America
Also by Ramón López
SUSTAINABLE DEVELOPMENT IN LATIN AMERICA: Financing and Policies
Working in Synergy (co-editor with Juan Carlos Jordan)
Also by Alberto Valdés
AGRICULTURAL RISKS AND INSURANCE: Issues and Policies (co-editor with
Peter Hazell and Carlos Pomareda)
FOOD SECURITY FOR DEVELOPING COUNTRIES (editor)
INTERNATIONAL FINANCE FOR FOOD SECURITY (with Barbara Huddlestot,
D. G. Johnson and S. Reutlinger)
THE ECONOMICS OF AGRICULTURAL PRICE INTERVENTIONS IN
DEVELOPING COUNTRIES: Volume 4 (with Maurice Schiff)
THE POLITICAL ECONOMY OF AGRICULTURAL PRICING POLICIES:
A Comparative Study of Developing Countries, Volumes 1–3 (co-editor with
Anne O. Krueger and Maurice Schiff)
Rural Poverty in
Latin America
Edited by
Ramón López
Professor
Department of Agricultural and Resource Economics
University of Maryland
and
Alberto Valdés
Agricultural Advisor
World Bank
Washington, DC
First published in Great Britain 2000 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London
Companies and representatives throughout the world
Acatalogue record for this book is available from the British Library.
ISBN 978-1-349-41954-8 ISBN 978-0-333-97779-8 (eBook)
DOI 10.1057/9780333977798
First published in the United States of America 2000 by
ST. MARTIN’S PRESS, LLC,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
ISBN 978-0-333-79290-4
Library of Congress Cataloging-in-Publication Data
Rural poverty in Latin America / edited by Ramón López and Alberto Valdés.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-333-79290-4
1. Rural poor—Latin America. I. López, Ramón, 1948– II. Valdés, Alberto,
1935–
HC130.P6 R87 2000
339.4'6'098—dc21
00–042071
Editorial matter, selection and Chapters 1 and 10 ©Ramón López and Alberto Valdés 2000
Chapter 2 ©Alberto Valdés 2000
Chapters 9 and 13 ©Ramón López 2000
Chapter 11 ©Ramón López and Claudia Romano 2000
Chapter 12 ©Ramón López and Timothy S. Thomas 2000
Chapter 14 ©Ramón López and Carla della Maggiora 2000
Chapters 3–8 ©Macmillan Press Ltd
Softcover reprint of the hardcover 1st edition 2000 978-0-333-79290-2
All rights reserved. No reproduction, copy or transmission of this publication may be made
without written permission.
No paragraph of this publication may be reproduced, copied or transmitted save with written
permission or in accordance with the provisions of the Copyright, Designs and Patents Act
1988, or under the terms of any licence permitting limited copying issued by the Copyright
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Any person who does any unauthorised act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified as the authors of this work in accordance
with the Copyright, Designs and Patents Act 1988.
This book is printed on paper suitable for recycling and made from fully managed and sustained
forest sources.
10 9 8 7 6 5 4 3 2 1
09 08 07 06 05 04 03 02 01 00
Contents
Foreword vii
Preface ix
List of Abbreviations xi
Notes on the Contributors xiii
1 Fighting Rural Poverty in Latin America: New Evidence
and Policy 1
Ramón López and Alberto Valdés
Part I Thematic Studies
2 A Rural Poverty Profile of the Region 35
Alberto Valdés
3 Rural Poverty, Women and Indigenous Groups in Latin America 49
Roberto P. Korzeniewicz
4 Land Markets and the Persistence of Rural Poverty:
Post-Liberalization Policy Options 65
Michael R. Carter and Eduardo Zegarra
5 Wage Employment and Rural Poverty Alleviation 86
Alejandra Cox Edwards
6 Rural Non-Agricultural Employment and Poverty in Latin
America: Evidence from Ecuador and El Salvador 99
Peter Lanjouw
7 Poverty, Entrepreneurs, and Financial Markets in the Rural
Areas of Mexico 120
Rodrigo A. Chaves and Susana M. Sánchez
8 Rural Poverty and Natural Resource Degradation 152
Edward Barbier
Part II Case-Studies
9 Determinants of Rural Poverty in Chile: Evaluating the Role of
Public Extension/Credit Programs and Other Factors 185
Ramón López
10 Determinants of Rural Poverty in Colombia 204
Ramón López and Alberto Valdés
v
vi Contents
11 Rural Poverty in Honduras: Asset Distribution and Liquidity
Constraints 227
Ramón López and Claudia Romano
12 Rural Poverty in Paraguay: The Determinants of Farm
Household Income 244
Ramón López and Timothy S. Thomas
13 Rural Poverty in El Salvador: A Quantitative Analysis 258
Ramón López
14 Rural Poverty in Peru: Stylized Facts and Analytics for Policy 281
Ramón López and Carla della Maggiora
Notes 306
References 319
Index 332
Foreword
The problem of poverty that affects so many people around the world has
come to the forefront of the field of development economics. For many years
the central focus of development economics was the analysis of policies and
programs that could promote faster economic growth rather than poverty
reduction itself. The implicit idea was that poverty was mainly associated
with economic stagnation and that, once developing countries were able to
grow faster, poverty would rapidly decline.
In part due to the historical experience of developing countries, show-
ing that the number of poor continues to grow over time, and in part
because of the increasing availability of data on poverty around the
world, the economics of poverty is now central to the study of economic
development and to the policy debate. However, the large volume of
literature dealing with the economics of poverty has so far focused
overwhelmingly on urban issues. This is the case despite the fact that in
most developing countries the majority of the poor still live in rural
areas and the depth of rural poverty is much deeper than in urban
areas. Also, the analytics and policies for rural poverty are likely to be dif-
ferent from those for urban poverty, mostly because of two reasons:
first, unlike the case of urban areas, the vast majority of the rural poor are
self-employed producers; second, the extent of market incompleteness is
much more widespread in rural than urban areas. Thus the analysis of
the rural poor has explicitly to consider factors influencing the capacity of
the household as a small entrepreneur and as a production unit. Addition-
ally, the impact of market insufficiencies on the household as producer
and consumer has to play a more central role in a rural context than in an
urban one.
This volume is an important step towards filling this gap in the literature
for the Latin American continent. It sheds light on the conceptual and, espe-
cially, on the empirical basis for understanding the determinants of income
of the rural poor explicitly considering the producer–consumer character of
many rural poor as well as the impact of market (and government) imper-
fections. By combining studies on rural households from six countries with
studies on rural markets, it shows how poverty is the result of not only
scarcity of assets, but especially of low asset productivity resulting from
widespread rural market imperfections and government failure. The case-
studies provide a wealth of new systematic information of rural households
in the region. At the same time a common methodology was used to develop
the surveys and econometric analyses. This constitutes a unique feature of
the case-studies that greatly facilitates comparing the different cases to
vii
viii Foreword
distinguish results that are idiosyncratic from those that are of a more
general nature.
RAMÓN LÓPEZ
ALBERTO VALDÉS
Preface
Reducing poverty is now recognized as a central objective for developing
countries. Accelerating economic growth is still regarded as the prime mech-
anism to diminish both the scope and depth of poverty. There is increasing
recognition, however, that the effectiveness of growth in reducing poverty
can be substantially enhanced though complementary interventions. In
order to elucidate which policies and programs work and which do not, it
is essential to understand the economics of the poor. A massive literature
on the issue has developed over the last two decades. Generation studies
focused mostly on poverty measures (numbers of poor, measures of poverty
gaps) followed by studies aimed at a characterization of the poor (who
are the poor, socio-demographic characteristics). A few studies have been
directed to the analytics of poverty, particularly trying to understand better
the determinants of household income and expenditures. It is these studies
that could shed light on the type of government intervention that could
increase the effectiveness of poverty reduction.
At the time of initiating the research for this volume, we were surprised
by two features of the literature on the economics of poverty: First, how
large was the literature on poverty measures, both theoretical and empiri-
cal, and how few were the number of studies devoted to the determinants
of income among the poor. Second, almost all available empirical studies of
poverty focused on the urban sector despite the fact that in most develop-
ing countries poverty was (and still is) much more widespread and deeper
in the rural areas. This prompted us to focus our research efforts to fill these
two important gaps in the literature. We decided to, first, initiate household
studies on the determinants of income in rural areas. We rapidly realized,
however, that the existing household survey data in rural areas were gener-
ally inadequate to permit us to explore in detail the factors that affect rural
household income. Also, isolated evidence for specific regions or countries,
while useful for the particular context, may not be sufficient to obtain gen-
eralizations and lessons for broader contexts. Thus we decided to develop
our own survey data for several countries in rural areas of Latin America
using a similar methodology and gathering the same type of information.
Also, the statistical and econometric analyses were based on similar method-
ologies and emphasized similar subjects. The homogeneity of data and
methodology across the six case-studies allowed us to compare findings dis-
tinguishing results that are case-specific from those that appear repeatedly
and can, therefore, be considered of a more general nature.
As the household case-studies were being completed we recognized that
the household perspective had to be complemented with a more ‘macro’
ix
