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Should India invest more in less-favored areas?:

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  • Fan, Shenggen
  • Hazell, P. B. R.

Abstract

Developing countries have to allocate limited government resources for rural areas among different investment activities and regions to achieve the twin goals of productivity growth and poverty alleviation. This is particularly important at a time when many countries are facing severe financial constraints. This paper develops a framework and provides empirical evidence on the impact of government investments in technology, irrigation, education and infrastructure on agricultural productivity growth and rural poverty reduction in rural India. The results reveal that government investments in more favored areas played significant roles during the green revolution period. But the marginal returns from additional government investments in these areas have declined in more recent years. It is now the less-favored areas where marginal returns are higher. This result has important policy implications for where government investments should be targeted in order to achieve further productivity growth and rural poverty reductions.

Suggested Citation

  • Fan, Shenggen & Hazell, P. B. R., 1997. "Should India invest more in less-favored areas?:," EPTD discussion papers 25, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:eptddp:25
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    References listed on IDEAS

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    1. Ravallion, Martin & Datt, Gaurav, 1995. "Growth and poverty in rural India," Policy Research Working Paper Series 1405, The World Bank.
    2. Rosegrant, Mark W. & Evenson, Robert E., 1995. "Total factor productivity and sources of long-term growth in Indian agriculture:," EPTD discussion papers 7, International Food Policy Research Institute (IFPRI).
    3. Gaiha, Raghav, 1989. "Poverty, Agricultural Production and Prices in Rural India--A Reformulation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(2), pages 333-352, June.
    4. Kerr, John M., 1996. "Sustainable development of rainfed agriculture in India:," EPTD discussion papers 20, International Food Policy Research Institute (IFPRI).
    5. Ghose, A K, 1989. "Rural Poverty and Relative Prices in India," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 13(2), pages 307-331, June.
    6. Datt, Gaurav & Ravallion, Martin, 1997. "Why have some Indian states performed better than others at reducing rural poverty?," FCND discussion papers 26, International Food Policy Research Institute (IFPRI).
    7. Bell, Clive & Rich, Robert, 1994. "Rural Poverty and Aggregate Agricultural Performance in Post-independence India," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(2), pages 111-133, May.
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    5. Radhakrishnan, Manju & Islam, Nazrul & Ward, Glynn, 2009. "Measuring the benefits from R&D investment beyond the farm gate: the case of the WA wine industry," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48169, Australian Agricultural and Resource Economics Society.

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