Agriculture accounts for the bulk of employment in developing countries and
contributes significantly to national income and export earnings. Given its dominance in
the economy, it will remain a primary source of growth and means of poverty reduction for
some time. It remains the backbone of the rural economy, and employs the majority of the
world’s poor people. The proportion of poor people remains highest in sub-Saharan Africa,
where slow economic growth has left millions at the margins of survival. In sub-Saharan
Africa alone, more than 314 million people continue to live on less than USD 1 a day. And
in most regions poverty remains a largely rural phenomenon.
The contribution of primary agricultural activities to the economy of developing
countries averages about 13%, ranging from 8% in Latin America and the Caribbean to
some 28% in South Asia, with much heterogeneity among countries in the different
regions. In addition, “extended agriculture”, which incorporates farm and non-farm
agricultural enterprises, contributes a much greater share of GDP – in Latin America, 30%
of GDP. As countries develop, primary agriculture’s share in national income declines. For
example, the share of agriculture in India’s GDP declined from about 45% in the early 1970s
to 27% in 2001. Despite this decline, some 60% of India’s people still depend on agriculture
for their livelihood. In sub-Saharan Africa, agriculture accounts for 20% of GDP, employs
67% of the total labour force and is the main source of livelihood for poor people. The World
Bank estimates that in African countries women do at least 70% of the agricultural work
(Mark Blackden, interview, World Bank, 23 February 2005). Although the share of GDP in
agriculture is declining in many countries in the region, it is increasing in others, as
agricultural value added rises or non-agricultural sectors shrink
At the macro level, growth in agriculture has consistently been shown to be more
beneficial to the poor than growth in other sectors. In several South Asian countries
poverty reduction through growth in agriculture was higher than that through growth in
manufacturing (Warr, 2001). Similarly, for every 1% of growth in agricultural GDP the
positive impact on the poorest was greater than that from similar growth in manufacturing
or services (Gallup et al., 1997). Such impacts are usually best realised where there is an
equitable distribution of assets, particularly land (de Janvry and Sadoulet, 1996). Ruralurban
links are also important. Growth in India’s rural sector reduced poverty in both rural
and urban areas, while urban growth reduced rural poverty (Datt and Ravallion, 1996).
Variations in poverty reduction mirror the variations in per capita agricultural growth.
And agricultural growth, particularly the growth of agricultural sector productivity, plays a
significant role in poverty-reducing growth (Thirtle et al., 2001). Very few economies around
the world have achieved broad-based economic growth without agricultural and rural
growth preceding or accompanying it (Mellor, 2000; Pinstrup-Andersen and Pandya-
Lorch, 2001).
In Asia the rapid productivity gains of the Green Revolution offered a route out of
poverty by increasing incomes and labour rates, lowering rural and urban food prices and
generating new upstream and downstream livelihood opportunities. This productivity
growth further stimulated and sustained wider economic diversification and
transformation beyond agriculture. But in much of sub-Saharan Africa, with a different set
of predetermining factors, productivity has stagnated or even fallen (Nkamleu et al., 2003).
The multiplier effects of agriculture on the economy are estimated to be in the range
of 1.35 to 4.62 (Thirtle et al., 2001), though those for sub-Saharan Africa are at the lower
end, with important implications for investment decisions in agriculture there (Box 1.3).
Income from agriculture tends to be spent on a range of goods and services at the local or
sub-national level, fostering opportunities for local diversification. So, while agriculture
remains a primary contributor to growth, particularly in the early stages of development, it
cannot function in isolation from the wider economy. It requires a supportive
environment, including the removal of factors constraining its growth such as
infrastructure. Nor can it drive growth alone – also needed are structural changes that
support knock-on effects in local product and labour markets
What impact can higher agricultural sector productivity
have on reducing poverty?
A lot. Consider these numbers:
● A 10% increase in crop yields leads to a reduction of between 6% and 10% of people living
on less than USD 1 a day (Irz et al., 2001).
● The average real income of small farmers in south India rose by 90% and that of landless
labourers by 125% between 1973 and 1994 as a result of the Green Revolution (World
Bank, 2001).
● A 1% increase in agricultural GDP per capita led to a 1.61% gain in the per capita incomes
of the lowest fifth of the population in 35 countries (Timmer, 1997).
● A 1% increase in labour productivity in agriculture reduced the number of people living
on less than USD 1 a day by between 0.6% and 1.2% (Thirtle et al., 2001)
A recent companion study to this report, Pro-Poor Growth in the 1990s: Lessons and
insights for 14 countries, confirms what agricultural growth, with its strong links to nonagricultural
growth, can do to reduce poverty. In the case study countries, most of the
reduction in poverty was among households primarily (though not exclusively) engaged in
agriculture. This was true even though non-agricultural growth was generally faster and
even though agriculture contributed only 10%-30% of GDP. Agricultural growth had its
greatest impact when it was driven by the crops that poor farmers cultivated most
(World Bank, 2005a).
contributes significantly to national income and export earnings. Given its dominance in
the economy, it will remain a primary source of growth and means of poverty reduction for
some time. It remains the backbone of the rural economy, and employs the majority of the
world’s poor people. The proportion of poor people remains highest in sub-Saharan Africa,
where slow economic growth has left millions at the margins of survival. In sub-Saharan
Africa alone, more than 314 million people continue to live on less than USD 1 a day. And
in most regions poverty remains a largely rural phenomenon.
The contribution of primary agricultural activities to the economy of developing
countries averages about 13%, ranging from 8% in Latin America and the Caribbean to
some 28% in South Asia, with much heterogeneity among countries in the different
regions. In addition, “extended agriculture”, which incorporates farm and non-farm
agricultural enterprises, contributes a much greater share of GDP – in Latin America, 30%
of GDP. As countries develop, primary agriculture’s share in national income declines. For
example, the share of agriculture in India’s GDP declined from about 45% in the early 1970s
to 27% in 2001. Despite this decline, some 60% of India’s people still depend on agriculture
for their livelihood. In sub-Saharan Africa, agriculture accounts for 20% of GDP, employs
67% of the total labour force and is the main source of livelihood for poor people. The World
Bank estimates that in African countries women do at least 70% of the agricultural work
(Mark Blackden, interview, World Bank, 23 February 2005). Although the share of GDP in
agriculture is declining in many countries in the region, it is increasing in others, as
agricultural value added rises or non-agricultural sectors shrink
At the macro level, growth in agriculture has consistently been shown to be more
beneficial to the poor than growth in other sectors. In several South Asian countries
poverty reduction through growth in agriculture was higher than that through growth in
manufacturing (Warr, 2001). Similarly, for every 1% of growth in agricultural GDP the
positive impact on the poorest was greater than that from similar growth in manufacturing
or services (Gallup et al., 1997). Such impacts are usually best realised where there is an
equitable distribution of assets, particularly land (de Janvry and Sadoulet, 1996). Ruralurban
links are also important. Growth in India’s rural sector reduced poverty in both rural
and urban areas, while urban growth reduced rural poverty (Datt and Ravallion, 1996).
Variations in poverty reduction mirror the variations in per capita agricultural growth.
And agricultural growth, particularly the growth of agricultural sector productivity, plays a
significant role in poverty-reducing growth (Thirtle et al., 2001). Very few economies around
the world have achieved broad-based economic growth without agricultural and rural
growth preceding or accompanying it (Mellor, 2000; Pinstrup-Andersen and Pandya-
Lorch, 2001).
In Asia the rapid productivity gains of the Green Revolution offered a route out of
poverty by increasing incomes and labour rates, lowering rural and urban food prices and
generating new upstream and downstream livelihood opportunities. This productivity
growth further stimulated and sustained wider economic diversification and
transformation beyond agriculture. But in much of sub-Saharan Africa, with a different set
of predetermining factors, productivity has stagnated or even fallen (Nkamleu et al., 2003).
The multiplier effects of agriculture on the economy are estimated to be in the range
of 1.35 to 4.62 (Thirtle et al., 2001), though those for sub-Saharan Africa are at the lower
end, with important implications for investment decisions in agriculture there (Box 1.3).
Income from agriculture tends to be spent on a range of goods and services at the local or
sub-national level, fostering opportunities for local diversification. So, while agriculture
remains a primary contributor to growth, particularly in the early stages of development, it
cannot function in isolation from the wider economy. It requires a supportive
environment, including the removal of factors constraining its growth such as
infrastructure. Nor can it drive growth alone – also needed are structural changes that
support knock-on effects in local product and labour markets
What impact can higher agricultural sector productivity
have on reducing poverty?
A lot. Consider these numbers:
● A 10% increase in crop yields leads to a reduction of between 6% and 10% of people living
on less than USD 1 a day (Irz et al., 2001).
● The average real income of small farmers in south India rose by 90% and that of landless
labourers by 125% between 1973 and 1994 as a result of the Green Revolution (World
Bank, 2001).
● A 1% increase in agricultural GDP per capita led to a 1.61% gain in the per capita incomes
of the lowest fifth of the population in 35 countries (Timmer, 1997).
● A 1% increase in labour productivity in agriculture reduced the number of people living
on less than USD 1 a day by between 0.6% and 1.2% (Thirtle et al., 2001)
A recent companion study to this report, Pro-Poor Growth in the 1990s: Lessons and
insights for 14 countries, confirms what agricultural growth, with its strong links to nonagricultural
growth, can do to reduce poverty. In the case study countries, most of the
reduction in poverty was among households primarily (though not exclusively) engaged in
agriculture. This was true even though non-agricultural growth was generally faster and
even though agriculture contributed only 10%-30% of GDP. Agricultural growth had its
greatest impact when it was driven by the crops that poor farmers cultivated most
(World Bank, 2005a).
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