Governance, agricultural productivity and poverty reduction in Africa, Asia and Latin America

Twenty per cent of the world's population or 1.2 billion live on less than US$1 per day; 70% of these are rural and 90% in Asia and sub-Saharan Africa. Research-led technological change in agriculture generates sufficient productivity growth to give high rates of return in Africa and Asia and has a substantial impact on poverty, currently reducing this number by 27 million per annum, whereas productivity growth in industry and services has no impact. The annual per capita "cost" of poverty reduction by means of agricultural research expenditures in Africa is US$144 and in Asia US$180 or 50 cents per day, but this is covered by output growth. By contrast, the annual per capita cost for the richer countries of Latin America is over US$11000. This paper extends this model by including measures of governance developed by Kaufmann et al. (1999). The rationale is simple, since the "government effectiveness" cluster provides an index of government ability to provide public goods. Hence, countries that score poorly are unlikely to be able to generate improved agricultural technologies. We show that government effectiveness is significant in explaining research effort, yields and gross domestic product (GDP) per capita. Copyright (c) 2007 John Wiley & Sons, Ltd.