Income dynamics and pathways out of rural poverty in Bangladesh, 1988-2004

Bangladesh has made considerable progress in alleviating poverty in the recent past. Using data from a nationally representative longitudinal survey of rural households in Bangladesh conducted in three waves in 1988, 2000, and 2004, this article relates the dynamics of rural poverty reduction to the structural shift in income generation mechanism from farm to nonfarm activities, changing household factor endowments, and the adoption of improved agricultural technologies over time.(1) The findings show that the occupational shift from the farm to the nonfarm sector, such as trade, business, and services, as well as the expansion of cultivated areas through tenancy, enhance income growth. Geographic mobility, overseas migration in particular, makes a significant contribution to income growth as well. The reduction in poverty appears to be vitally dependent on the enhancement of the endowment of human and physical capital that augments the poor households' capability to better exploit income-generating opportunities and place the households on a sustainable route out of poverty.