Policy lessons from China's success in poverty reduction and how they can benefit global anti-poverty governance in the agricultural sector - case of Uganda

Agricultural Growth for Economic Development 

The importance of the pattern of growth to China’s progress against poverty carries a lesson for Uganda and Africa at large. When so much of a country’s poverty is found in its rural areas it is not surprising that agricultural growth plays an important role in poverty reduction. In an unusual historicalcircumstance, relatively equitable land allocation could be achieved at the time of breaking up the collectives. China’s experience is consistent with the view that promoting agricultural and rural development is crucial to pro-poor growth, particularly at the early stages, given the potential for small-holder farming to rapidly absorb unskilled labor.

China’s success in poverty reduction provides a great lesson about the need to give higher priority to agricultural growth rather than industrialization at the early stages of economic development. Agricultural growth precedes aggregate growth in developing countries. By this view, only when agricultural output has risen sufficiently will it be possible to release labor from agriculture for the infant non-farm sectors. In a relatively closed economy or one in which the food staples are largely non-tradable, higher domestic food output will also entail lower food prices and hence allow new manufacturing enterprises to pay low wages, further stimulating growth in the non-farm economy. China’s success in labor-intensive manufacturing clearly rested in part at least on the availability of cheap wage goods.

Developing countries keen to industrialize have often tried to accelerate the process. Indeed, even China may well have switched its sectoral attention out of agriculture too quickly. It seems that after attaining a degree of food security, and higher incomes for the peasant class, the political economy demanded higher living standards for the relatively better off middle- and upper-income groups. The associated shift in the sectoral and geographic pattern of China’s growth fueled rising inequality and dulled the impact of subsequent growth on aggregate poverty incidence. In this respect, Uganda might actually need to maintain its sectoral emphasis on agriculture and rural development for a longer period than China did at a comparable point in time.

Development strategy for Africa that is firmly grounded in agricultural and rural development can bring a larger and more sustained impact on poverty.Just as has happened in China, there will be a time when the emphasis in Africa will naturally shift to secondary and tertiary sectors. But with the levels of poverty prevailing in Sub-Saharan Africa today, and the sub-continent’s still relatively abundant supply of not too unequally distributed land, an agriculture-based strategy must for now be at the center of any effective route out of poverty, just as it was in China during the early 1980s.