Trade Reforms, Farm Productivity, and Poverty in Bangladesh

This paper analyzes the distributional impacts of trade reforms in rural areas of Bangladesh. The liberalization of trade in irrigation equipment and fertilizer markets during the early 1990s has led to structural changes in the agricultural sector and a significant increase in rice productivity. A...

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Bibliographic Details
Main Authors:	Klytchnikova, Irina, Diop, Ndiame
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AGRARIAN ECONOMY AGRICULTURAL EMPLOYMENT AGRICULTURAL GROWTH AGRICULTURAL HOUSEHOLDS AGRICULTURAL INCOMES AGRICULTURAL MARKETS AGRICULTURAL PRICES AGRICULTURAL PRODUCTION AGRICULTURAL PRODUCTIVITY AGRICULTURAL SECTOR AGRICULTURAL SECTORS AGRICULTURAL WAGE AGRICULTURAL WAGES AGRICULTURE AVERAGE YIELDS CLIMATIC CONDITIONS COMMODITY CONSUMER DEMAND CONSUMER PRICE CONSUMER PRICES CONSUMERS CONSUMPTION EXPENDITURES CROP INCOME CROP PRICES CROP PRODUCTION CROPS CULTIVATED LAND CULTIVATION DEMAND FOR GOODS DEREGULATION DISTRIBUTIONAL EFFECTS DOMESTIC MARKETS DROUGHT ECOLOGICAL ZONES ECONOMIC GROWTH ELASTICITY ELASTICITY OF DEMAND ELASTICITY OF SUPPLY EMPLOYMENT OPPORTUNITIES EXPANSION OF IRRIGATION EXPENDITURE FARM FARM ACTIVITIES FARM EMPLOYMENT FARM EMPLOYMENT OPPORTUNITIES FARM HOUSEHOLDS FARM INCOME FARM PRODUCTIVITY FARMER FARMING FERTILIZER GREEN REVOLUTION GROWTH RATE HARVESTS HOUSEHOLD BUDGET HOUSEHOLD INCOME HOUSEHOLD SIZE HOUSEHOLD SURVEYS HOUSEHOLD WELFARE IMPACT ON POVERTY INCIDENCE OF POVERTY INCOME INCOME EFFECTS INCOME GAINS INCOME GROWTH INCOME LEVELS INCOME SHARES INEQUALITY INNOVATION INTERNATIONAL MARKETS INTERNATIONAL TRADE IRRIGATION LABOR MARKETS LANDLESS HOUSEHOLDS MARGINAL REVENUE MARKET PRICES MULTIPLIER EFFECT MULTIPLIER EFFECTS MULTIPLIERS PADDY POOR POOR FARMERS POOR HOUSEHOLDS POOR RURAL HOUSEHOLDS POOREST HOUSEHOLDS POVERTY DYNAMICS POVERTY HEADCOUNT RATES POVERTY IMPACT POVERTY INCIDENCE POVERTY LEVEL POVERTY LEVELS POVERTY LINE POVERTY RATES POVERTY REDUCTION POVERTY STATUS PRICE CHANGE PRICE CHANGES PRICE DECLINES PRICE FLUCTUATIONS PRICE INCREASE PRICE INDEXES PRICE LEVELS PRODUCER PRICE PRODUCTION PRODUCTION INPUTS PRODUCTION OF RICE PRODUCTION PROCESS PRODUCTIVITY IMPROVEMENTS REAL GDP REAL INCOME RICE RICE CROP RICE CULTIVATION RICE PRICE RICE PRICES RICE PRODUCTION RICE VARIETIES RICE YIELDS RURAL RURAL AREAS RURAL ECONOMY RURAL GROWTH RURAL HOUSEHOLDS RURAL INCOMES RURAL LABOR RURAL LABOR MARKET RURAL MARKETS RURAL POOR RURAL POPULATION RURAL POVERTY RURAL SECTOR SALES SMALL FARMERS SMALL-SCALE IRRIGATION SPREAD SPRING STATIC ANALYSIS STRUCTURAL TRANSFORMATION SUBSISTENCE SUBSISTENCE AGRICULTURE SUPPLIERS TRADE LIBERALIZATION TRADE REFORMS WAGE EARNERS WAGE EMPLOYMENT WAGE RATES WELFARE LEVEL WHOLESALE PRICE
Online Access:	http://documents.worldbank.org/curated/en/2006/08/6962161/trade-reforms-farm-productivity-poverty-bangladesh http://hdl.handle.net/10986/8371

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Summary:	This paper analyzes the distributional impacts of trade reforms in rural areas of Bangladesh. The liberalization of trade in irrigation equipment and fertilizer markets during the early 1990s has led to structural changes in the agricultural sector and a significant increase in rice productivity. A resulting increase in output has been associated with a decline in producer and consumer rice prices of approximately 25 percent. Using a combination of ex-post and ex-ante approaches, the authors investigate the implications of the changes in rice productivity and prices for the welfare of households. They find that the net effects of increased rice productivity and lower rice prices have benefited the poor. Regardless of the particular category analyzed, the poorest households emerged as being particularly positively affected by reforms in the 1990s. This mainly reflects the fact that they are predominantly net rice buyers in both urban and rural markets. In contrast, large net sellers of rice, among the better-off households in the rural areas, were the main losers. Since net buyers in rural areas tend to be poorer than net sellers, trade liberalization has benefited the poor. Although the authors are not able to test empirically what has happened to the welfare level of agricultural wage earners, secondary evidence suggests that they have gained from trade liberalization.

Trade Reforms, Farm Productivity, and Poverty in Bangladesh

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