Rural Poverty, Risk and Development

Rural Poverty, Risk and Development

Marcel Fafchamps

This book investigates the relationships between rural poverty, risk, and development. Building upon the author’s work in the area, it summarises the contributions of recent theoretical and empirical work to our understanding of how risk affects rural poverty levels in developing countries. In particular the book examines what we do and do not know about risk coping strategies among today’s poor rural societies. Ways in which these strategies may be re-examined and improved by governments and international organisations are proposed.

Chapter 6: Risk and Development

Marcel Fafchamps

Subjects: development studies, development economics, economics and finance, development economics


So far we have discussed how the rural poor deal with risk. We now focus on the relationship between rural poverty, risk, and economic development. The poor’s inability to deal with risk does not only have welfare effects. It also reduces a society’s capacity to accumulate, innovate, and develop. Risk thus contributes to creating a vicious circle of poverty. A proper understanding of the interaction between risk and poverty is essential to identify the obstacles to growth and development in poor rural societies. This chapter discusses several mechanisms through which poverty and vulnerability hurt growth. 6.1 NUTRITION AND HUMAN CAPITAL It has long been recognized that poverty is detrimental to the accumulation of human capital, and in particular to health, nutrition, and education. It is hardly novel to point out that the poor are malnourished. In fact, malnutrition is often used as an indicator of poverty, if not synonymous with it, and the provision of adequate nutrition is at the core of many efforts to combat poverty (World Bank 1986). In this section we revisit some of these issues and reinterpret them in relation to risk and risk coping strategies. Given the voluminous literature on these issues, we limit ourselves to a brief survey of the salient themes. 6.1.1 Fertility and Infant Mortality In Chapter Two we stressed that health risk is one of the major risk factors faced by the rural poor and that it disproportionately affects children. As a result, child mortality is high in...

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