Did the Commodity Price Spike Increase Rural Poverty? Evidence from a Long-Run Panel in Bangladesh

In: Science

Submitted By ercabrera
Words 267
Pages 2
Did the commodity price spike increase rural poverty? Evidence from a long-run panel in Bangladesh

Abstract

We assess the effects of the dramatic rise in agricultural commodity prices during 2007-2008 on income dynamics and poverty among rural households in Bangladesh. A unique panel data set allows us to put the effects of recent events in the context of long-run trends in income and poverty. We use data from a nationally representative longitudinal survey of rural households in Bangladesh collected in four waves in 1988, 2000, 2004, and 2008. Nargis and Hossain (2006) analysed income dynamics and poverty incidence for the first three waves, finding a declining trend in both the incidence and severity of poverty, aided in particular by human capital development and the off-farm employment opportunities. We update and extend the analysis to include data collected in 2008, at the height of a spike in agricultural prices. We find that the price of a balanced food basket increased by more than 50 percent during 2000-2008, while household income rose only 15 percent. As a result the incidence and severity of rural poverty in Bangladesh sunk to pre-2000 levels during 2004-2008. Thus the price spikes in 2007-2008 helped push an additional 13 million people into poverty in rural Bangladesh. Moreover, we find that the determinants of poverty have not been time-invariant. In particular, agricultural production, which had previously been associated with a higher incidence of poverty, served as a hedge against higher food prices during 2004-2008.

Keywords: poverty, income, commodity price spike, rural households, Bangladesh, panel…...

Similar Documents

Current Situation of Inflation in Bangladesh

...University of Dhaka A Report on “Inflation: Perspective Bangladesh” Date of Submission: May 26, 2011 A Report on “Inflation: Perspective Bangladesh” Course no. & name: F-203-Macroeconomics Submitted to: Mohammad Salahuddin Chowdhury Lecturer Department of Finance University of Dhaka Submitted by: Group: Morning Stars Sec-B BBA 16th batch Dept. of Finance University of Dhaka Date of Submission: May 26, 2011 Group members are Name | Roll | K. M. Najmus Sakib | 16-020 | Mobasheera Tasnim | 16-052 | Md. Kamrul Islam | 16-090 | Rajib Kumar Deb | 16-106 | Shaykha Sultana | 16-160 | Md. Shamsul Alam | 16-172 | Letter of Transmittal May 26, 2011 Mohammad Salahuddin Chowdhury Lecturer Department of Finance University of Dhaka Subject: Submission of a report on “Inflation: Perspective Bangladesh” Dear Sir, We are presenting a report on “Inflation: Perspective Bangladesh”. In this report we have included various methodologies to explain the current scenario of inflation in Bangladesh. In making the study, we had to take help from the various sources of internet, different institutes and class lectures of our course teacher. We are grateful to them for extending generous help. We acknowledge the contribution of our course teacher heartily. We have tried to use our academic knowledge in real life. We are pleased to be granted this vital opportunity and grateful for your versatile assistance. We hope that our......

Words: 8353 - Pages: 34

Inflation Trends and Poverty in Bangladesh

...Inflation Trends and Poverty in Bangladesh CONTENTS ABBREVIATIONS .................................................................................................................ii EXECUTIVE SUMMARY ....................................................................................................iii I. INTRODUCTION ....................................................................................................................1 II.INFLATION A. What is Inflation B .How is it measured C. Inflation and Interest rates D. Inflation and Investments Types of Inflation II. TREND OF MACROECONOMIC PERFORMANCE AND POVERTY REDUCTION INITIATIVES IN BANGLADESH ......................................................2 A. Growth Performance ...............................................................................................2 B. Savings and Investment ..........................................................................................2 C. Inflation ...................................................................................................................3 D. Fiscal Sector Developments ....................................................................................3 E. Macroeconomic Challenges of Bangladesh ............................................................4 F. Medium-term Macroeconomic Framework.............................................................5 G...

Words: 4096 - Pages: 17

Garments Business in Bangladesh

...1. Introduction After independence in 1971, Bangladesh moved to a private sector led export oriented economy in late 1970’s from a highly protected government led economy in search of prosperity and growth. Even though there was little growth and development in the country as a whole; one particular sector, the Readymade Garment (RMG) industry was the beneficiary of privatization. From 0.2 percent in 1980’s, it came to 75 percent in 2004-05 of country’s total export. This industry employs 1.8 million people of whom 90 percent are women. Trade liberalization as a form of globalization followed by the imposition of quotas by US was the key input while entrepreneurs played the anchor role to take advantage of these conditions. Government also came forward with favourable policies for further growth. However, the quota oriented worldwide apparel trade came to an end on December 2004. What is going to happen in the Bangladesh apparel industry, which was predicted to lose its stake in an open market? This dissertation aims to discover the condition of the apparel industry as a whole at present and how the firms adjust to the situation with their internal rearrangement. Additionally, issues considered as vital for industry’s growth, such as infrastructure, information technology in the form of database, internet and software, and capacity building will be discussed. The dissertation starts with the global picture of apparel trade, and with a brief description how this......

Words: 21242 - Pages: 85

Poverty in Phillipine

...2007-1 Why Does Poverty Persist in the Philippines? Facts, Fancies, and Policies Arsenio M. Balisacan SOUTHEAST ASIAN REGIONAL CENTER FOR GRADUATE STUDY AND RESEARCH IN AGRICULTURE Science and education for agriculture and development Arsenio M. Balisacan SEARCA College, Los Baños, Laguna Tel/Fax: (63) 495362290 E-mail: post@agri.searca.org The SEARCA Agriculture and Development Discussion Paper Series aims to disseminate information on current trends or researches to inspire discussion between the author and other stakeholders in the same field of interest. SEARCA encourages readers to directly contact the author through the address provided or join the discussion board for this paper at http://bit.ly/searca-dps-2007-1. DISCLAIMER The point of view taken in this paper is entirely that of the author and does not reflect in any way, SEARCA’s position. INTRODUCTION A ddresing the widespread poverty problem is the single most important policy challenge facing the Philippines. Not only is poverty high compared with other countries in East Asia, but also its reduction is so slow that the country has become the basket case in the region. Proposals peddled to address the poverty problem are plenty—and keep growing. At one end of the spectrum are proposals contending that the root of the problem is simply the lack of a respectable economic growth. Putting the economy on a high-growth path is prescribed as all that is needed to lick the poverty problem. At......

Words: 7211 - Pages: 29

Digital Bangladesh

...Final Draft PERSPECTIVE PLAN OF BANGLADESH 2010-2021 ____________________________ MAKING VISION 2021 A REALITY General Economics Division Planning Commission Government of the People’s Republic of Bangladesh April 2012 Contents ABBREVIATIONS ...............................................................................................................................v PREAMBLE of the Perspective Plan (2010-2021) ............................................................................ 1 I. ............................................................................................................... Context of the Perspective Plan .................................................................................................................................................................. 1 II. .......................................................................................... Current state and Development Perspective .................................................................................................................................................................. 1 EXECUTIVE SUMMARY .................................................................................................................... 2 CHAPTER 1: VISION FOR A PROSPEROUS FUTURE........................................................................ 10 1.1 The Vision ..........................................................................................................

Words: 49012 - Pages: 197

A Report on Financial Markets & Institutions of Bangladesh

...A Report On Department of Financial Markets Since liberation war an evidence of Bangladesh Submitted To : Raad Mozib Lalon Lecturer Department of Banking & Insurance University of Dhaka Submitted To : Raad Mozib Lalon Lecturer Department of Banking & Insurance University of Dhaka Submitted By : MD. RAKIBUL HASAN ID: 51427012 Department of Banking & Insurance University of Dhaka Submitted By : MD. RAKIBUL HASAN ID: 51427012 Department of Banking & Insurance University of Dhaka Date of Submission : 17 December 2014 December 17, 2014 Lecturer Raad Mozib Lalon Department of Banking and Insurance EMBA Program Faculty of Business Studies University of Dhaka. Subject: Submission of Financial Markets & Institutions Term Paper. Dear Sir, I were assigned to prepare a report on Financial Markets & Institutions. It was an individual report on “Department of Financial Markets Since liberation war an evidence of Bangladesh”. You provided the study materials to cover the report with the guidelines. I would like to express my sincere appreciation and gratitude to you for your help in the preparation of this report and I have tried to my best to make this report as comprehensive and informative as possible within the time allowed for me. Due to various constrains; there may be some mistakes for which I...

Words: 9405 - Pages: 38

A Research Proposal on Mpact of Rural Banking on Farmers in Bangladesh

...IMPACT OF RURAL BANKING ON RURAL FARMERS IN BANGLADESH (Md. ibrahim kholilullah,Agricultural Economics and Business Studies, sylhet Agricultural University,Bangladesh; phone: 01718996557) INTRODUCTION: Bangladesh is an agro-based country, essentially are endeavoring for rapid development of the country. More or less 80 percent people directly or in directly depend on agriculture for their occupation .But it is a matter of great sorrow that farmers of our country get less facility in agricultural inputs especially agricultural credit. Due to the lack of credit at proper time they cannot produce crops at proper efficiency. So the responsibility of rural banks needs to be increased. Because If current agricultural trends continue, by the year 2020 in Bangladesh food shortage will increase many times, .The lower calorie intake could lead to poverty, malnutrition and hunger. In an attempt to alleviate some of these potential problems, several institutional and non-institutional sources of rural credit have been made available to Africans. It is hoped that, in the long term, credit will enable the poor to invest in agricultural and non-agricultural productive assets, to adopt new technologies and farming methods, and to minimize environmental degradation. Bangladesh, like other developing countries, has traditionally experienced low productivity, low income levels, low domestic savings, unemployment, and malnutrition. The Bangladesh government, through the Bangladesh......

Words: 3987 - Pages: 16

A Research Proposal on Mpact of Rural Banking on Farmers in Bangladesh

...AGRICULTURAL UNIVERSITY ,01718996557) Bangladesh is an agro-based country, essentially are endeavoring for rapid development of the country. More or less 80 percent people directly or in directly depend on agriculture for their occupation and live in villages .But it is a matter of great sorrow that farmers of our country get less facility in agricultural inputs especially agricultural credit. Due to the lack of credit at proper time they cannot produce crops at proper efficiency. So the responsibility of rural banks needs to be increased. Because If current agricultural trends continue, by the year 2020 in Bangladesh food shortage will increase many times, .The lower calorie intake could lead to poverty, malnutrition and hunger. In an attempt to alleviate some of these potential problems, several institutional and non-institutional sources of rural credit have been made available to Africans. It is hoped that, in the long term, credit will enable the poor to invest in agricultural and non-agricultural productive assets, to adopt new technologies and farming methods, and to minimize environmental degradation. Bangladesh, like other developing countries, has traditionally experienced low productivity, low income levels, low domestic savings, unemployment, and malnutrition. The Bangladesh government, through the Bangladesh Bank , established Rural Banks to channel credit to productive rural ventures and promote rural development. Rural development is a strategy intended......

Words: 3308 - Pages: 14

Rural & Urban Bangladesh

...Introduction: The scope of defining rural in today’s context is becoming overwhelmingly difficult as the gap between urban and rural divide is being narrowing down with the growth of modern communication and technology. Therefore, ruralness perhaps can be best understood with the meaning provided by the specific context in which it is described. For our case rural areas are large and isolated areas of a country, often with low population density and limited access to knowledge and resources. However, when rural areas put together as homogeneous community with similar constraints and opportunities, it may then dictate the representation of the total population and economic scenario of a country such as Bangladesh. The population is predominantly rural with about 76.61 percent of the total population living in rural areas and directly or indirectly engaged in a wide range of agricultural activities (BBS, 2001) Bangladesh witnesses a gradual increase in the share of the industrial and service sectors to GDP over the years yet agriculture remains a fundamental sector with Contribution of 22% to GDP and Absorption of more than 60% of national workforce. The agricultural business in Bangladesh is mainly centers round three types of agents including producers, traders and consumers. The traders are not doing anything special but gaining the extra profit from change of hands. This system exploits the producers directly by not giving the appropriate share they......

Words: 5001 - Pages: 21

Forecasting of Commodity Prices

...Forecasting and Analyzing World Commodity Prices René Lalonde* Principal Researcher International Department Bank of Canada Zhenhua Zhu Economist Research Department Bank of Canada October 18, 2002 Frédérick Demers** Economist Research Department Bank of Canada Abstract This paper develops simple econometric models to analyze and forecast three components of the Bank of Canada commodity price index (BCPI), namely non-energy commodity prices (BCNE), the West Texas Intermediate crude oil price (WTI), and other energy prices. In the paper, we present different methodologies to identify transitory and permanent components of movements in these prices. A structural vector autoregressive (SVAR) model is used for real BCNE prices, a multiple structural-break technique is employed for real crude oil prices, and an errorcorrection model is constructed for real prices of other energy components. Then we use these transitory and permanent components to develop forecasting models. We assess our models’ performance in various aspects, and our main results indicate: (a) for real BCNE prices, most of the short-run variation is attributed to demand shocks, (b) the world economic activity and real U.S. dollar effective exchange rate explain much of the cyclical variation of real BCNE prices, (c) real crude oil prices have two structural breaks over the sample period, and their link with the world economic activity is strongest in the most recent regime, (d) real prices of other energy......

Words: 9822 - Pages: 40

Poverty in Bangladesh

...Introduction :Bangladesh is one of the world's most densely populated countries with 150 million people, 26% of whom live below the national poverty line of US $2 per day.In addition, child malnutrition rates are currently at 48%, in condition that is tied to the low social status of women in Bangladeshi society.A small country in the South Asia, tucked between India and the Bay of Bengal, of the Indian Ocean. Stricken by poverty, overpopulation, and malnutrition many people in this country are destitute. Economy: While Bangladesh suffers from many problems such as poor infrastructure, political instability, corruption, and insufficient power supplies, the country's economy has grown 5-6% per year since 1996. However, Bangladesh still remains a poor, overpopulated, and inefficiently-governed nation with about 45% of the Bangladeshis being employed in the agriculture sector. Rural and urban poverty: The World Bank announced in June 2013 that Bangladesh had reduced the number of people living in poverty from 63 million in 2000 to 46 million in 2010, despite a total population that had grown to approximately 150 million. This means that Bangladesh will reach its first United Nations-established Millennium Development Goal, that of poverty reduction, two years ahead of the 2015 deadline. Bangladesh is also making progress in reducing its poverty rate to 26 percent of the population.[4] Since the 1990s, there has been a declining trend of poverty by 1 percent each......

Words: 1700 - Pages: 7

Alf Money and the Prices in the Long Run and Open Economies

...ALF Money and the Prices in the Long Run and Open Economies Name Institution Contents 1.0 Introduction 3 2.0 History of Economic Changes and comparing it to Forecast for the next Five Years 3 2.1 Changes in GDP 3 2.1.1 Economic Forecast 4 2.2 Changes in Savings 4 2.2.1 Economic Forecast 4 2.3 Changes in Investment 5 2.3.1 Economic Forecast 5 2.4 Changes in Unemployment Rates 6 2.4.1 Economic Forecast 6 2.5 Changes in Real Interest Rates 7 2.5.1 Economic Forecast 7 3.0 How Government Policies Can Influence Economic Growth 8 4.0 Influence of Monetary Policy 8 5.0 Influence of Trade Deficits or Surpluses 9 6.0 The market for loanable funds and the market for foreign-currency exchange 9 7.0 Recommendation based on the Achievement of the Strategic Plan 10 8.0 Conclusion 11 ALF Money and the Prices in the Long Run and Open Economies 1.0 Introduction (Creasey, Rahman, & Smith, 2012), defines economic growth as the rise of the monetary value of the goods and services produced by a country or an economy over a given period. Economic growth is simply the percentage change (increase or decrease) in the real GDP (gross domestic product) (Ahmad, 2013). "The economy of the United States is among the top largest economies in the world though it is facing stiff competition from other economies such as China," (Orhangazi, 2008). An analysis of the US economy reveals......

Words: 3179 - Pages: 13

Scaling Up Access to Finance for India's Rural Poor

...Finance for India’s Rural Poor September 6, 2004 FINANCE AND PRIVATE SECTOR DEVELOPMENT UNIT South Asia Region Document of the World Bank TABLE OF CONTENTS EXECUTIVE SUMMARY I. INTRODUCTION 2 India’s Rural Finance Landscape 4 What are the financial needs of the rural poor? 4 Rural finance service providers 5 II. ACCESS TO RURAL FINANCE IN INDIA: THE EVIDENCE 8 Supply Side Indicators of Access to Finance 8 Access to Rural Finance: Evidence from the Demand Side 12 Access to savings/deposit accounts 14 Payments Services – Limited use, high cash economy 15 Access to Credit 15 Access to Insurance 17 The Importance of Informal Finance 17 III. WHAT CONSTRAINS ACCESS TO FINANCE FOR INDIA’S RURAL POOR? 19 Why Banks Are Reluctant To Lend to Rural Clients 19 Lack of credit information. 20 The tyranny of collateral 20 Weak legal framework and enforcement issues. 21 Government policy 21 Why Do Small, Rural Borrowers Find Rural Banks Unattractive? 26 Absence of flexible products and services 26 Transactions costs 26 Collateral 27 IV. RECENT EFFORTS IN INDIA TO IMPROVE RURAL ACCESS TO FINANCE: THE ROLE OF FORMAL—INFORMAL LINKAGES AND NEW PRODUCTS 28 SHG-bank Linkage Approach: Linking Commercial Banks to Grassroots Borrowers 28 How Effective Has SHG Bank Linkage Been in Targeting the Poor? 30 Impact on vulnerability of poor households 32 Some Lessons from SHG Bank......

Words: 29724 - Pages: 119

Success of Microfinance in Bangladesh: Its Determinants, Impacts & Challenges

... Success of Microfinance in Bangladesh: Its Determinants, Impacts & Challenges Chapter- One Introduction 1.1 Introduction: In recent years, microcredit, in its wider dimension known as microfinance, has become a much favored intervention for poverty alleviation in the developing countries and least development countries. There is scarcely a poor country and development oriented donor agency (multilateral, bilateral and private) not involved in the promotion (in one form or other) of a microfinance program. Microfinance programs claim many achievements as its impact and an outside observer cannot but wonder at the range of diversity of the benefits claimed. Although Bangladesh has huge potential for development, it is, for various socio-economic reasons, among the poorest countries in the world. About half of the country's population lives below the poverty line with 80% in the rural areas. The burden of poverty falls disproportionately on women, who constitute half of the total population. Logically, therefore, poverty alleviation and creation of rural employment are top priorities in the development agenda of the government of Bangladesh (GOB) which has adopted a broad based approach to poverty alleviation, emphasizing macroeconomic stability, economic liberalization, and support for a number of government agencies and non-government organizations (NGOs). Substantial progress has been made in implementing the microcredit program (MCP), and the scope for its......

Words: 21504 - Pages: 87

Economic Growth & Poverty Reduction in Bangladesh

...BUS530 MACROECONOMICS ECONOMIC GROWTH & POVERTY REDUCTION IN BANGLADESH Prepared by Aadil Choudhury 112 0322 660 Section 1 INTRODUCTION The relationship between economic growth and poverty reduction is not always automatic. To achieve poverty reduction, robust economic growth is necessary but not sufficient. The financial allocation and source of finance play a crucial role in implementing the development endeavor and achieving macroeconomic objectives like growth, employment, and price stability. Investing in some sectors of the economy may contribute to rapid economic growth while others may contribute to poverty reduction. Again there are some sectors which may contribute to achieving both growth and poverty reduction. BANGLADESH’S CHALLENGES IN ECONOMIC GROWTH & POVERTY REDUCTION Bangladesh has had some success in attaining economic growth and reducing poverty. But many more challenges lie ahead of us which we must face to eradicate poverty and move towards a poverty-free Bangladesh. Challenge of better monetary management The country has opted for following a selective credit control measures with expansionary credit policy to essential sectors and contractionary policies to luxury items. It has been following 'free-float currency' policy which appears to be a mere luxury with both export and import sectors of the country suffering from structural rigidities. Free float of Bangladesh currency along with erosion of dollar vis-a-vis other......

Words: 3948 - Pages: 16

NONTON MOVIE | ΙΣΤΟΡΙΚΗ | Digimon Adventure Tri. ...