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Report proposes solution to failure of rural development behind poverty-driven migration from world’s poorest countries

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Report proposes solution to failure of rural development behind poverty-driven migration from world’s poorest countries

Report proposes solution to failure of rural development behind poverty-driven migration from world’s poorest countries
Photo credit: UNCTAD

UNCTAD puts forward new road map for transforming rural economies and eradicating rural poverty

In a bold move, UNCTAD’s The Least Developed Countries Report, subtitled Transforming Rural Economies, presents a road map to address rural poverty, lack of progress in rural transformation and the root causes of migration within and from the least developed countries (LDCs).

The report also invokes the principle that “to will the ends is to will the means” in calling for donors to meet their long-standing commitment to provide 0.7 per cent of their gross national income in development aid. This will allow donors to make allocations in line with the LDC share of global needs to meet the recently adopted Sustainable Development Goals, and which would amount to a six-fold increase in aid to LDCs by 2030.

“In many least developed countries, migration is triggered by rural poverty, reflecting the lack of economic opportunities to earn even a minimally adequate income,” UNCTAD Secretary-General Mukhisa Kituyi said when launching the report. He added: “There can be no sustainable solution to the migration crisis without a poverty eradication-oriented approach to transforming rural economies in these countries.”

Poverty-driven rural-urban migration fuels excessive rates of urbanization in many LDCs. Further, many international migrants come from rural areas – either directly or after first migrating to towns and cities in their own countries. The report’s recommendations aspire to slow this process by focusing on rural development, which emphasizes poverty reduction and thus seeks to “create the conditions for a rural-urban migration process driven primarily by choice rather than necessity”.

Rural development is also critical to the Sustainable Development Goals, which aim to “leave no one behind”. The first Goal aims to end poverty in all forms by 2030. More than two thirds of people in LDCs live in rural areas, where poverty is twice as widespread as in towns and cities. The report indicates that the Goal of poverty eradication will require a doubling of the so-called “global consumption floor” (which is the estimated income per person in the poorest households in the world) in just 15 years, while it has been stagnating for 20-30 years (figure 1).

Shortfalls in rural areas are also much wider for other Goals such as universal access to water, sanitation, electricity and education. Meeting the Sustainable Development Goals in rural areas of LDCs will require a “quantum leap” in the rate of infrastructure investment: more than twice as many people would have to gain access to water each year than was the case in 2011-2012, four times as many to electricity, and six times as many to sanitation (figure 2).

LDC Report 2015 UNCTAD

Figure 1. The solid line indicates estimates of the “global consumption floor” – in effect, the income per person of the poorest household in the world – from 1981 until 2011, using two alternative baselines for the calculation ($1 per day and $1.25 per day). The dotted line shows the increase that would be needed to achieve Sustainable Development Goal target 1.1 of eradicating extreme poverty by 2030 – that is, raising the income of the poorest household to the $1.25-a-day poverty line – assuming that there has been no further reduction since 2011. The historical estimates are from Martin Ravallion, 2014, table 1, p. 32.

Figure 2. The first two sets of columns show the annual increase in the number of people in rural areas of LDCs with access to water, electricity and sanitation during the 10 years before the adoption of the Millennium Development Goals in 2000, and from then until the latest available data in 2012. The final set of columns shows the annual increase that would be needed from now until 2030 if the Sustainable Development Goal targets of universal access to water, electricity and sanitation by 2030 are to be achieved, based on United Nations population projections. The data for 2000-2012 are from the World Bank’s World Development Indicators database.

Poverty can only be eradicated if there are employment and economic opportunities for all, with incomes above the poverty line matched by productivity – a process the report terms “poverty-oriented structural transformation”. But, with current policy approaches, such a transformation has barely begun in most LDCs.

In order to achieve this in rural areas of LDCs, the report therefore proposes a new approach, articulated around a three-phase increase in infrastructure investment, and the combination of increasing agricultural productivity and promoting non-farm activities.

By using labour-based construction methods and buying construction materials locally, increased infrastructure investment boosts local demand for food and other consumption goods. The report argues that by helping local producers to respond to this increase in demand, Governments can initiate a virtuous circle of increasing incomes, demand and productivity. The key is to combine upgrading of small-scale agricultural production with the development of more productive non-farm activities, while maximizing the synergies between the two.

A wide-ranging policy chapter highlights a number of key policy priorities and principles to achieve this.

A critical issue is sequencing infrastructure investment and interventions to ensure that producers can respond effectively to changes in market conditions. The first phase focuses on increasing supply potential, combining infrastructure investment which mainly impacts productivity (for example. electrification) with measures to improve supply response. This prepares producers for a second phase focusing on increasing demand as well as productivity, through labour-based infrastructure investment. Together with support to agricultural upgrading and the development of dynamic non-farm enterprises, this prepares the ground for a third phase focused on “opening” by strengthening rural-urban transport linkages, allowing producers to survive the resulting exposure to wider competition and to exploit wider markets.

Financing increased infrastructure investment is crucial. The report calls for donors to fulfil their commitments on the quality of aid as well as its quantity. Furthermore, it proposes an increase in the target for aid to LDCs to a level reflecting their share of global needs to achieve the Sustainable Development Goals, which it puts at 0.35 per cent of donors’ gross national income. If donors did this while simultaneously raising total official development assistance up to the 0.7 per cent target, this would increase aid to LDCs from around $40 billion to $250 billion by 2030, while also allowing a 150 per cent increase in aid to non-LDC developing countries.

More than ever, rural economic transformation will be central to development in LDCs in the post-2015 era; and the SDGs signal both the need and the opportunity for a new approach, given the gap between the progress required by 2030 and that achieved in recent decades. As well as a major increase in infrastructure investment, UNCTAD’s The Least Developed Countries Report 2015: Transforming Rural Economies highlights the some elements of such an approach:

  • Successful rural economic transformation depends on a combination of agricultural upgrading and development of non-farm economies, maximizing the synergies between the two.

  • Sequencing investments and interventions is critical, to ensure that producers are ready to respond effectively to increased demand and to market opening when they happen.

  • Affordable financing is essential: Options may include interest subsidies on microcredit subject to interest ceilings, and in-kind microgrants in remote and isolated areas.

  • Agricultural upgrading requires higher and more stable R&D spending, and strong extension services acting as a two-way conduit between R&D agencies and small farmers.

  • Adult education and training is important as well as sending children to school, and it should include financial literacy and vocational and business skills as well as basic literacy and numeracy.

  • An enabling environment for enterprise requires attention to the demand side as well as the supply side. Information about prospective changes in demand and market conditions is a key element.

  • Effective policy coordination is essential at the national level; and producers’ associations, cooperatives and women’s networks have an important role at the local level.

  • Fulfilment by donors of their commitments on ODA quantity and quality will be essential; and there is a strong case for increasing the target for ODA to LDCs to 0.35 per cent of donor GNI.

  • Innovative approaches to trade and cross-border investment could make a significant contribution to rural transformation in the post-2015 context.

  • Developmental regionalism can also have substantial benefits, particularly in sub-Saharan Africa, as can regional and interregional collaboration in agricultural R&D.


NOTE: Forty-eight countries currently are designated by the United Nations as LDCs: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, the Central African Republic, Chad, the Comoros, the Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, the Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, the Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, the Sudan, Timor-Leste, Togo, Tuvalu, Uganda, the United Republic of Tanzania, Vanuatu, Yemen and Zambia.

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