Social Development and Public Governance > Agriculture and Rural Development
Effect of the Structure of Rural Public Expenditures on Agricultural Growth and Rural Poverty in Latin America
By Ramón López (12/04, RUR-04-01, En, Es)
This working paper is being published with the sole objective of contributing to the debate on a topic of importance to the region, and to elicit comments and suggestions from interested parties. This paper has not gone through the Department's peer review process or undergone consideration by the SDS Management Team. As such, it does not reflect the official position of the Inter-American Development Bank.
This paper, prepared by Ramón López, professor at the University of Maryland College Park for the Rural Development Unit, analyzes the impact of the composition of rural public expenditures on 10 Latin American countries for the period 1985-2000 using various econometric estimation methods and ways of aggregating the data. The principal findings, which are robust given the different estimation methods used, are that not only does the level of rural public expenditures matter but the expenditures are on public goods such as infrastructure on agricultural research or on private subsides for irrigation water and credit. The countries that spent a higher proportion on public goods increased agricultural contributions to gross domestic product faster than those that did not. The countries that spent more on public goods showed more intensification of agriculture and more employment creation leading to less pressure on agricultural frontiers and less rural poverty. The conclusion is renewed efforts are needed to better focus scarce public funds in the pursuit of economic development. The reason for the suboptimal pattern in many countries is attributed to political economy factors.
Last updated: 05/21/07
