Beyond the City: the Rural Contribution to Development

This page in

Beyond the City: the Rural Contribution to Development

Explore rural devlopment issues in Latin America and the Caribbean with David Lederman, co-author of Beyond the City: the Rural Contribution to Development. This new report evaluates the effects of the rural sector on national growth, poverty reduction, and environmental degradation in Latin America and the Caribbean.

Gustavo Durán Araújo:
Apreciado Señor Lederman. La intensidad del conflicto armado en Colombia se vive principalmente en las zonas rurales, de la misma forma y conectado con un vínculo importante el fenómeno del narcotráfico influye notablemente en la productividad de las zonas rurales. Colombia es un país rico en extensiones de tierra apropiadas para la producción agropecuaria y la conservación ambiental. ¿hasta que punto en Banco se decide en diversificar su apoyo (no solo a la consecuencia más notable de las problemáticas antes mencionadas)para que la inversión en el sector rural colombiano, se una fuente importante de desarrollo y mitigación del conflicto?

Translation by World Bank: Dear Mr. Lederman: The intensity of the armed conflict in Colombia is mainly seen in rural areas, but at the same time and connected through an important link, the drug trafficking phenomenon notably influences the productivity of rural areas. Colombia is a country rich in land suitable for farming and livestock production as well as environmental conservation. Up to what point does the Bank decide to diversify its assistance so investment in the Colombian rural sector could be an important source of development and conflict mitigation? Thanks. Gracias

Daniel Lederman:
Es posible que el desarrollo rural pueda ayudar a reducir el conflicto armado que está vinculado al narcotráfico, pero la verdad es que no sabemos cómo hacerlo porque también es posible que inversiones rurales ayuden a agilizar el cultivo y tráfico de productos ilícitos. Definitivamente, deberíamos estudiar estos temas con más profundidad.

It?s possible that rural development can help reduce armed conflict like narcotrafficking, but the truth is that we can't be sure because it?s also possible that rural investments could aid the cultivation and trafficking of illicit products. We should definitely study this issue more profoundly.

Marco Machado:
Porque el sector rural tiene menos veneficios que el urbano, al urbano le subsidian electricidad, le le ponen escuelas y en el algunos casos agua, sera por la masa de votos que este sector representa...

Translation by World Bank:
Why does the rural sector have fewer benefits than the urban sector? The urban sector gets electricity subsidies, schools and sometimes water. Do you think this is because of the number of votes that the sector represents?

Daniel Lederman:
Es muy posible que la estructura del gasto público en nuestros países y su asignación entre sectores urbanos y rurales sea producto de fuerzas de economía política. Por ejemplo, la capacidad de movilización política de grupos de interés urbanos puede ser superior a la de los hogares rurales porque los costos de organización popular en el campo son más altos.

It?s very possible that the structure of public spending in our countries and the allocation between urban and rural sectors is the product of political economic forces. For example, the capacity of political mobilization/lobbying of urban interest groups could be stronger than those from rural areas because the costs of grass roots organization in rural areas are higher.

Preston Montes:
This question is about R&D spending. would increasing R&D Guarantee economic Growth in Latin America? What level of political stability is the WB looking in a country like Bolivia. What is your take on the Natural Gas situation in Bolivia. Should Bolivia export their Natural Gas, or should it use it for its own industrialization? Because of Bolivia's debts, is selling the Natural Gas a condition for future loans?
Daniel Lederman:
There are many difficult questions here, and I'm going to answer the question about research and development spending, and I must say at the outset that there is no silver bullet for development. There is never a guarantee that a particular policy will work. However, we do know from empirical evidence that the rates of return to research and development spending in the typical agriculture R&D projects in Latin America and the Caribbean are quite high. There are studies, for example, that show that the typical agricultural R&D project has a rate of return of about 40 percent. So, for example, for each dollar that's invested in agricultural R&D, the project yields $1.40. That's a rate of return of 40 percent. And therefore, R&D spending either by the private sector or also by the public sector can be good business and good development policy, although, as I said earlier, there are no silver bullets.
Tony Sebiani S:
PREGUNTA PARA LA CHARLA Estoy de acuerdo con el Sr. Liberman, los países en vías de desarrollo debemos promover el desarrollo rural para reducir la pobreza, la presión sobre los recursos naturales y las migraciones campo-ciudad. El desarrollo rural además trae muchas ventajas intrinsecas como la reducción de la delincuencia en las ciudades entre otras. No obstante, ¿Cómo realizaran los países en desarrollo ese Desarrollo Rural? Me refiero a la inversión que debe realizarse, Inversión Extranjera Directa, Deuda interna o externa del Gobierno, créditos blandos (quién va a financiar los proyectos). A mi criterio, los Gobiernos deben empezar ese movimiento, invirtiendo en caminos, puentes, EDUCACION (ESTE PUNTO ES PILAR), en fin Salud, agua y otros que mejoren la calidad de vida del campo y generen las condiciones para que se de este desarrollo (hay que ser claros y distinguir gasto e inversión, si los dineros se contratan para INVERSIÓN entonces no importaría que a corto o mediano plazo se incremente el déficit fiscal), una vez pasada esta primera etapa, será posible captar Inversión Extranjera Directa e Inversión Privada Nacional, pero también debe ser claro desde el principio que papel y que nichos de mercado se llenaran con la esta producción ( es decir que vamos a vender y donde ). Por otrp ladp es immportante que nuestras exportaciones cuenten con un alto grado de Valor Agregado Nacional y que los recuros financieros liberados con los fondos de pensión sean reinvertidos en nuestros países y que financien a empresarios nacionales, y no como ocurre hoy que se colocan en el exterior, donde intermediarios financieros nos los colocan luego pero a intereses mucho mayores. Saludos, Tony Sebiani S Costa Rica.

Translation by World Bank:
I agree with Mr. Liberman that developing countries should promote rural development to reduce poverty, the pressure over natural resource, and rural-urban migration. At the same time, rural development brings many other intrinsic advantages, such as crime reduction in cities, among others. Nevertheless, how will developing countries implement this rural development? I mean the investment needed, direct foreign investment, government?s internal or external debt, soft credits?who will finance the projects? I think that governments should start this movement by investing in roads, bridges, education (this is key), health, water, and other services that improve the quality of life in rural areas and generate the conditions to foster this type of development. We have to be clear and differentiate between expenditure and investment. If the moneys are allocated for investment, then it would not matter that the fiscal deficit would increase in the short- or long-term, because once this first phase is over, it would be possible to attract foreign direct investment and domestic private investment. On the other hand, it is important that our exports count with a high level of domestic aggregated value and that the financial resources freed with pension funds will be reinvested in our countries, not abroad. Sincerely, Tony Sebiani S Costa Rica.

Daniel Lederman:
Su pregunta es sumamente importante y tiene que ver con dos puntos esenciales. Primero, cómo tenemos que invertir los escasos recursos que tenemos disponibles para el campo. Segundo, cómo podemos financiar ese gasto público para el desarrollo rural. Pensamos que la respuesta al primer punto es que, como usted dice, el gasto rural tiene que enfatizar la provisión de bienes públicos como por ejemplo la educación, la salud, caminos e inversión en investigación y desarrollo agropecuarios. Asimismo, pensamos que este mayor gasto social se tiene que financiar inicialmente a través de una reasignación de recursos, reduciendo los subsidios a grupos de interés particulares y aumentando el gasto social. Una vez que logremos este cambio, podemos discutir cómo financiar un mayor gasto rural en su totalidad, pero definitivamente tenemos que enfatizar la calidad del gasto público que ya tenemos disponible.

English version:

Your question is extremely important and has to do with two key points. First, how do we invest the scarce resources that we have disposable for the rural sector? Second, how can we finance public spending for the rural sector?

We think the answer to the first point is that, as you say, rural spending has to emphasize the provision of public goods like education, health, roads, and investments in agricultural research and development.. Also, we think that more public spending needs to be financed initially through the reallocation of resources, reducing subsidies to special interest groups and increasing social spending. Once we have achieved this change, we can discuss how to increase total public spending in the rural sector. But first, we definitely have to emphasize the quality of public spending at our current disposal.

Leila Shaw:
your study talks of the need to put in place programs to support restructuring of small domestic producers in importing sectors. how much would be needed for these programs and realistically how much would/should each small producers expect??
Daniel Lederman:
Yes, our study clearly supports public sector involvement in providing restructuring assistance to small producers, especially poor rural households that produce currently agricultural commodities that are not competitive, given the region's natural endowment, and therefore these producers will need assistance to restructure their operations, especially during periods of trade liberalization with imports rising -- we need progress but without leaving anybody behind.

In Latin America, we have numerous experience with the public sector programs to aid small producers, and in general, the assistance received by each producer has been, and should probably continue to be, relatively small.

So, for example, it should be enough to help the rural families overcome the most extreme forms of poverty, especially food poverty, and those usually families participating in these programs can expect to get some percentage of the value of the basic food basket. So, we can get like 30 percent of the value of purchasing the basic food basket.

What we are saying in the report, which is perhaps more important, is that such assistance can also be conditioned on the communities themselves taking actions to help invest such that the communities, as a whole, can restructure their productive activities. So, for example, one possibility is to follow the model of pro campo in Mexico whereby small producers would get a fixed financial assistance that they could do whatever they want with it, and we believe that this type of program has a disadvantage, that it doesn't provide any direct incentives for communities to undertake important social events.

Another model to look at is the programs such as the bursa familia in Brazil (or something) in Mexico, whereby rural families receive financial assistance from the government conditional on families, communities maintaining children in school, and/or obtaining medical checkups so that we ensure that future generations will have good health and sufficient education to help both generations find a way out of poverty.

Sara Tamayo Insuasti:
Ecuador,mi país, registra uan serie de problemas estructurales y de crisis económicas, por tanto cuando ud. señala de programas especiales de restructuración para pequeños productores, ¿podría ser más puntual al señalar programa de reestructuración aplicable a nuestro entorno?

Translation by World Bank
My country, Ecuador, suffers from a series of structural problems and economic crises; therefore, when you mention special restructure programs for small producers, could you be more specific and mention a restructure program that can be applied to our situation?

Daniel Lederman:
En general, existen dos tipos de programas para apoyar a los productores pequeños durante periodos de transformación productiva. El primero se basa en transferencias financieras directas a los productores sin condición alguna. Este tipo de programa, por ejemplo, se implementó en México bajo Procampo. Otra opción es proveer ayuda financiera condicionada en que los productores pequeños hagan inversiones productivas, por ejemplo en la educación de los niños o en la construcción de capital social en las comunidades. Ese tipo de programa es similar a Oportunidades en México o a Bolsa Familia en Brasil.

English version:

In general, there are two types of programs of support for small producers during periods of productive transformation. The fist is based in direct, unconditional financial transfers (subsidies) to producers. This type of program, for example, was implemented in Mexico through ?Procampo?.. The other option is to provide conditional financial support, whereby small producers are obligated to make productive investments. For example, educating children or constructing social capital in the communities. This type of program is similar to Oportunidades in Mexico or Bolsa Familia in Brazil.

Martin Satney:
conceptually, the broad principles of your publication are acknoowledged.However, SIDS of the Caribbean, such as ST. Lucia, the situation is slightly different(size, resources,resilience,etc.)why isn't the WBk Grp. showing greater sensitivity to the development issues (rural, social, economic...) impacting on the smaller, >vulnerable SIDS of the Caribbean Region? The recent statement by SG/UN, K. Annan, reflects similar concerns.
Daniel Lederman:
We appreciate your question. We certainly agree that small countries such as many islands in the Caribbean face particular challenges for development of poverty reduction. We have been at the forefront, for example, in the worldwide drive to overcome the AIDS epidemic, and we are very much aware of the links between the youth in the Caribbean and the public health challenges presented by AIDS, and also in some countries the challenges presented by social violence.

The islands also face important challenges because an important source of their wealth comes from tourism, and we believe that the tourism industry can be a source of wealth for the islands and for development, and this challenge is faced more in the islands than larger economies that have a more diversified productive structure. And we look forward to working with all of the governments of the Caribbean on these and any other developmental and poverty challenges that you can present to us. We try our best to give answers, and if we don't have them we look for them.

Carlos Hinestrosa:
In Latin America we can identify a bunch of rural development proyects, a lot of international institutions has been investing in these programs, what do you think has to be the strategy to fight against rural poverty?, are those proyects efficient enough?, do they have any significant impact, considering the high cost?
Daniel Lederman:
The question is very important because it forces us to think hard about how we evaluate the social benefits of public investment or social investment programs implemented by the public sector. Let me give you one example. The program called 'PROCAMPO' in Mexico has been evaluated by researchers from the University of Berkeley. They collected household survey data that tells them how much income rural families in Mexico were able to get from PROCAMPO benefits and compare those with similar families that do not receive the PROCAMPO benefits.

What these researchers versus found, for example, is that PROCAMPO beneficiaries were able to generate somewhere between 1.4 and 1.8 pesos for each peso they got from the program.

This means that the rate of return for the PROCAMPO benefits ranges between 40 and 80 percent. These are very large numbers, and we still have some doubts about how those numbers can be so large. One possibility is that the poor rural households face severe market failures in access to rural credits, and therefore when they are given one peso, they are able to make the productive investment that they hadn't previously done, such as investments in making the farm more efficient or funding the nonfarm employment in nearby rural communities, for example, might be some of the benefits that you get that go beyond the government assistance, and that's how sometimes public assistance might be able to generate more than one peso from each peso that they receive from PROCAMPO.

Now, the disadvantage of programs like PROCAMPO is that though we know that they benefit directly the families that received the transfers, we are not sure if it benefits rural communities as a whole.

In other words, it's expected that people who receive money from the government will be better off than people who don't. But we do not know if the community, as a whole, needless to say the country, is better off from those transfers to poor rural families.

On the other hand, we have programs like Bolsa Familia in Brazil where the public sector assistance depends on the families and communities making invaluable investments in human capital, meaning education and in health. And a well educated and healthy society produces benefits for everybody, not just for the children who are getting medical checkups and are getting the proper education.

So, think hard, as we move along, especially in the World Bank, about what is a good methodology for evaluating the social gains or the gains to society as a whole from programs such as Bolsa Familia or even PROCAMPO, and that is a very difficult and complex issue, and we look forward in the coming years to work on adequate program evaluation tools to aid our government and community leaders to better decide public policies to help make strides in the fight against rural poverty.

isabella duno:
Doesn't the fact of a larger rural population and an unequal pattern of landholding strengthen the case for land reform?
Daniel Lederman:
We do find that the rural population of Latin America and the Caribbean is about 42 percent of the region's population, much higher than what official statistics suggest, which suggests that the number is around 24 percent of the region's population. We believe it's closer to 42 percent. But this doesn't mean that the redistribution of land is more important than it used to be. It is just as important because in the end, this change of number is a change in accounting, it is not economics. It does not change the reality on the ground which, as you say, and we acknowledge, is one of severe inequalities in land and many other assets that are important for the poor.

However, we note from historical experience in Latin America and the Caribbean that land reforms do not necessarily guarantee that the beneficiary families will be able to find a way out of poverty, and the reason is very simple: Land alone does not create income which would then allow families to overcome poverty. You need much more than land. You need access to credit. You need access to technological services, research and development services. You need some minimum infrastructure so that people can go to school and workers can get to their jobs, and farmers can find markets for their products.

If we focus only on land, we run the risk of providing land and nothing else which will condemn future generations of rural poor families to continue to do the impossible in their search for a better standard of living, which is to work on soils of poor quality without the needed complementary assets that are required to really make a dent in rural poverty. So, land alone will not do the job.

isabella duno:
your report advocates dismantling the farm subsidies of countries in the region. How much though will be needed to compensate the countries' poorer farmers who'll obviously need help to adjust?
Daniel Lederman:
Thank you very much for this question. It's a very important one. In the report, we conclude that from the viewpoint of the world, it is crucial that the international trade negotiations succeed for reducing and hopefully eliminating rich-country agricultural subsidies because the subsidies in rich countries are maintaining agricultural commodity prices, especially in grains and foodstuff, artificially low, and thus hurting farmers of the sensitive commodities in developing countries.

However, we also are realistic in that we realize that the majority of Latin American and Caribbean countries are net importers of the agricultural commodities that are subsidized in the rich countries. Therefore if we are successful in our efforts to limit these subsidies, we can expect prices of those commodities to rise, and therefore the majority of Latin American and Caribbean countries will face higher food prices, and these higher food prices will benefit producers of those commodities but hurt consumers and countries as a whole, especially poor people in rural and urban areas that are important consumers of food, such as bread, tortillas, rice; and therefore, we also realize that in order to reduce the potential damage that increases in food prices can have on Latin American societies, we can reduce the sometimes extremely high, high taxes imposed on the importation of food into our countries.

Now, you do have to pay a lot of attention to those producers, rural producers, the small, poor households that produce the sensitive crops to help them adjust to a context in which there will not be any more rich country subsidies, but also will not have the high import taxes.

So, we must help them take necessary steps so that future generations of rural families of Latin America and the Caribbean do not face the same obstacles to their well-being. Now, the specific question as to how many financial resources will be required to help those families, that will depend on specific situations. Usually these programs have granted financial assistance from the government to small producers or small households that is just barely enough for them to be able to purchase a minimum food basket. So, how much that costs, how much the food basket costs will not only vary across countries but even across regions within countries, and therefore it's a very difficult question to answer precisely. But usually it will be a percentage of the poverty line or a percentage of the minimum wage in each country.

Now, I think that the more important question is what type of assistance they require. How do we spend that extra peso or that extra dollar in rural communities? I think that will be the most difficult question, and what we say in the report is we are better off in terms of reducing poverty and helping the competitiveness of Latin American and Caribbean agriculture if we spend more public funds in making the necessary investment in the provision of social services than in providing direct subsidies to producers of particular commodities, which often end up in the hands of large commercial farmers and never reach poor rural families.

armando:
La contribución del sector primario dentro del PIB es mucho menor que la población que depende de este sector, sin embargo esta subvaluada, esto puede ser porque una gran parte de la población practica agricultura de subsistencia y es en general difícil de cuantificar, otro punto importante es la contribución del sector primario a el bienestar dentro de la población con externalidades positivas y bienes públicos como son las relacionadas con el medio ambiente y la contención de mano de obra que no puede ser empleada en el resto de los sectores. Cuantificaron algunos de estos puntos con una metodología clara y sólida dentro de su publicación o solo se trata de decir con estadísticas lo que ya sabemos? (lo que tienen en ppt)

Translation by World Bank:
The contribution of the primary sector to the GDP is much lower than the population that depends on this sector; nevertheless, this is undervalued. It could be because a big part of the population practices subsistence agriculture and it is generally difficult to quantify. Another reason could be the primary sector?s contribution to the well-being of the population with positive externalities and public assets, such as those related to the environment and the restraint of labor that cannot be employed in other sectors. These issues were quantified with a clear and solid methodology in your publication or are you trying to tell us what we already know with statistics? (What you have in PowerPoint).

Daniel Lederman:
Agradezco tu pregunta y te tengo dos respuestas. Primero, sí, posiblemente estamos diciendo con estadísticas algunas cosas que los especialistas ya conocían, pero hay muchas cosas que valen la pena decirlas con estadísticas sólidas para refrescar la memoria de los que se han olvidado o que las han ignorado y ese es uno de los objetivos de nuestra investigación: promover el debate público en nuestros países sobre la pobreza. La segunda respuesta que te tengo es que si tenemos en el informe ejercicios estadísticos y econométricos con metodologías claras y sólidas sobre puntos claves. Por ejemplo, el hecho que el producto interno bruto agropecuario sea bajo (5% en México y 12% para la región) no quiere decir que la contribución del campo esté limitada al tamaño del sector que observamos. Por lo tanto en el estudio presentamos resultados econométricos que demuestran que, en promedio en América Latina, cuando crece el producto bruto agropecuario crecen otras actividades que no son parte del sector primario. Nuestro análisis sugiere que cuando crece el sector primario agropecuario, el resto de la economía promedio latinoamericana crece en un 0,12%. Asimismo, cuando crece la producción agropecuaria, el ingreso de los hogares más pobres de América Latina crece alrededor de 0,2%. Y bueno, hay muchos ejemplos en el estudio de análisis sólidos y metodologías claras. Y te invitamos a leerlo.
rhodante ahlers:
The report is clear on the need for public spending in the rural sector. Given the Bank's involvement in decimating the public sector in Latin america during the eighties by strongly encouraging legislative changes in the rural sector (Mexico: overhaul rural credit in 1989 and new Agrarian and new Water law in 1992 strongly supported and influenced by the Bank) and in the last decade by promoting sub sovereign financing in combination with emphasising high credit rating, what will de Bank learn form this report? How will it change: 1. its policy 2. its approach to national and subnational governments. Is it not time for the Bank to own up for its misguided policies? When and how will the Bank support social and sustainable development, withmore focus on the public rather than the private sector?
Daniel Lederman:
We really appreciate this very tough question. We appreciate it because we spend a lot of time and effort in assessing government and public sector policies throughout the developing world, and usually we are among the first in the development community and public sector community to acknowledge where policies and what policies have worked, not worked, or that we do not have a firm answer as to the effectiveness of such policies.

We hope that this report will instigate debate not only within The World Bank Group, but throughout the developing world, and especially throughout Latin America and the Caribbean, about how do our societies want to face up to the challenge of extreme rural poverty and to the challenge of maximizing the potential, the great potential that the rural sectors have to contribute to the well-being and to the development not only of rural communities but of society at large.

We do not have all the answers, but when you are looking into creating new ways to fight rural poverty more effectively, and to fight general poverty more effectively... What have we done been doing in terms of our relationship with governments? One of the main messages of this report is that rural development programs need to, and must be, designed and implemented in a partnership not only with central governments and local governments, but especially with local communities so they are better able to achieve those objectives, one, to identify the needs of local communities in terms of implementation of public services such as transport services, infrastructure; such as communications, water, et cetera; schooling, health. There is nobody that knows better in the development what are the obstacles to poverty reduction in rural communities than the residents themselves. Moreover, the quality of public investment in social services, especially in infrastructure and transport services will depend on the efforts of local communities to help maintain the roads, help maintain the electricity lines; and therefore, we see no choice and no better alternative to community-driven development programs.

Now, it doesn't mean the government should take the back seat to local communities. On the contrary, the central government has a key role to play in terms of coordinating the nation's efforts to combat rural poverty everywhere, including urban poverty, and thus the central government has a key coordination role, and also has to play a strong role in terms of informing communities about the experiences of other communities, so that mistakes don't get repeated and good good ideas get replicated.

One government also has a role to play in communicating local community leaders and local and civil society more generally, and most supervise the maintenance and implementation of local investment projects.

So, this complicates our work, but development and the fight against poverty has never been easy.

Leila Shaw:
According to the report, success in reducing poverty in marginalized regions will depend on the ability of both central and local governments to work with local communities to identify economic opportunities and constraints and to balance local needs with national interests. In some cases it will require a proper valuation of environmental services and devising effective and innovative ways for national and global communities to adequately pay for them. Exactly how would this be done....and what are some "effective and innovative" ways that could be considered?
Daniel Lederman:
Your question is a very challenging question that has to do with policies or methodologies that will tell us how much environmental services provided by our forests, by our natural waterways are worth. This is a very complicated technical issue, but the world as a whole has made some recent innovations. On the one hand, at the global level, there are markets being developed for exchanging pollution limits, and the idea is that the polluters or potential polluters know how much value they can extract from our natural resources, and the price of pollution will rise with competition for scarce environmental resources.

At the national level, even developed countries but also in poor countries, sometimes it will be virtually impossible to ascertain with precision what is the value of a natural resource, be it natural beauty or be it environmental services; and therefore, the solution has historically been to set aside areas for environmental conservation that the scientific community believes are crucial for sustainability of the environment and biodiversity in the countries and for the world as a whole.

However, this policy needs to be accompanied with international and national government investments in helping the residents of those areas where the valuable resources are located find alternative livelihoods to the exploitation of our forests and the contamination of our waters.

This will be more complicated because in each country, the context will be different, and the costs of transforming those communities will vary, but we certainly believe that the rest of the world and the rest of society within our countries must at least become aware that those communities and regions that are rich in environmental resources and rich in biodiversity are, in fact, providing a service to us all.

eduardo g. ramirez h.:
Cree usted que el bajo desarrollo agroindustrial de America, es una de las anclas que tienen nuestras sociedades rurales y urbanas en su crecimiento economico?

Translation by World Bank
Do you think that the low agro-industrial development in the Americas is one of the barriers to economic growth in the rural and urban areas?

Daniel Lederman:
Definitivamente, pensamos que el desarrollo agroindustrial de América Latina puede ser fuente de dinamismo económico y un componente importante en el combate contra la pobreza.

De hecho, en el estudio presentamos análisis estadísticos que demuestran que cuando crece el sector agropecuario, el resto de la economía promedio de América Latina también crece. Asimismo, cuando crece el campo, aumentan los ingresos de los hogares más pobres en una proporción mucho más alta de lo que sugiere el tamaño relativo del sector.

English version:

Definitely we think that agroindustrial development in Latin America could be a source of economic dynamism and an important component in the fight against poverty. In fact, in our study we present statistic analysis that demonstrate that when the agricultural sector grows, the rest of the economy also benefits.

At the same time, when the rural sector grows, the income of the poorest households grow at a much higher rate than what the relative size of the sector would suggest.

Rodrigo Wagner:
Estimado Daniel: Realmente es un gran trabajo para relanzar el tema rural en las dimensiones que tiene. Los felicito. Por lo mismo, creo que abre muchas preguntas nuevas, de las cuales seleccioné una: Consederando que muchos parlamentos Latinoamericanos tienen una sobre-representación de sectores "rurales", en terminos de representantes per capita, resulta paradojico que los gobiernos se centren tanto en los sectores urbanos, y que la discusión rural historicamente haya sido dominada casi solamente por el precio de un par de commodities, que normalmente afectaban sólo a los grupos con mayor poder en el campo. Mi pregunta es entonces ¿Que oportunidades ves para que los pobres rurales tengan acceso a un lobby de calidad, que les permita producir presión política (pensando en Becker, 1983) realmente alineada con sus necesidades y no sólo un grupo de presión para ser capturado?
Daniel Lederman:
The question by Roderigo Wagner is what opportunities that are there to build an effective lobbying mechanism for rural communities to be able to have their voices heard by governments and the rest of societies so that public resources don't get captured by special interest groups.

The answer is that this is very difficult to do, but a good place to start is by ensuring that public investment projects are linked to the active participation of rural communities, so that at least in that way will ensure they have some voice in determining the types of public investment that will be undertaken in their communities.

Another interesting option is to think about how to restructure the institutions of government so that the ministries of agriculture have a say at the table with respect to where public investments are made and what public investments are made. In most Latin American countries, the structure of government is such that the ministries of public works and the ministries of education and other members of the governments are the ones, along with the ministries, make the decision as to where we invest in schools, where we invest in health, and where we invest in roads, and this means that the ministries of agriculture are therefore relegated to becoming a spokesperson for strong agricultural interests, and this might be one explanation of why rural public expenditures in Latin America end up being so burdened by subsidies and provision of public services remains scarce.

But if we think hard about it, the real solution in the long-run, for which I do not have a particular recommendation, is political development characterized by more active participation by rural populations.

Now, the fact that we know that the rural population is quite large means that there is some hope for the future because in democratic regimes, the weight of votes cannot be ignored, so it becomes really an issue of social and political organization at the grassroots level.

Thank you for taking part in the discussion. For more information on this topic, we encourage you to read the report:
Beyond the City: the Rural Contribution to Development.

Also available in: French and Spanish



Featuring

Lead Economist and Deputy Chief Economist for Latin America and the Caribbean of the World Bank