Accelerating Agriculture and Rural Development for Inclusive Growth: Policy Implications for Developing Asia

Abstract

 Developing Asia stands witness to the impact of economic growth on poverty reduction. The incomes and 
quality of life for many people have improved and poverty levels are falling. But results vary with rural growth lagging 
behind urban growth in many countries and subregions. Two thirds of the region’s 3 billion people live in rural 
areas, and in India, for example, 74 percent of people classified as poor are in rural areas (ADB 2004). The difference in 
urban and rural growth and poverty outcomes is socially and politically untenable, as witnessed in the recent 
election in India. Rural poverty problems in many cases become urban poverty problems through rising pressure on 
cities to absorb rural migrants needing jobs, homes, and services. 
Pre-1980s, the rural economic problem was commonly seen as undersupply of affordable food and raw materials to 
support industrialization as the engine of rapid growth. The strategy greatly influenced the design and choice of public 
policies. Overvalued exchange rates were intended to help new industries establish domestic markets and lower 
costs of imported materials, but lowered the domestic currency earnings for farmers in export markets. 
Administered food prices lowered consumer prices but lowered returns to farmers as well. Agricultural 
commodities and land were heavily taxed to force the transfer of resources out of rural areas. Farm input subsidies 
encourage production of food crops but lead to resource wastage, and often benefit well-to-do farmers. Such policy 
biases lower agriculture’s terms of trade, distort market signals, and undermine agricultural growth (Krueger 
1992).In the above back setting. An attempt is made to briefly outlines the potential for agriculture and rural 
development as a critical force for inclusive growth and sustained poverty reduction and reviews experiences in 
the Asian region with  agriculture in economic transformation. It highlights major policy challenges for 
accelerating agriculture and rural development.