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 7: Conclusion

Marcel Fafchamps

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


We now take stock of what we have learned about the relationship between risk, rural poverty, and economic development. We also make suggestions regarding future work and policy intervention. A special emphasis is put on identifying current gaps in knowledge and areas where empirical work is most needed to support or vindicate recent theoretical developments. 7.1 WHAT WE HAVE LEARNED We have learned that risk affects the rural poor in numerous and profound ways. The magnitude and range of shocks that affect rural populations of the Third World is without comparison in developed economies. Perhaps the only way to describe it to people who have never been there is to compare it to a war economy: death strikes at random a large proportion of the population, especially children; the provision of health services is either non-existent or insufficient; trade with the rest of the world is difficult so that many commodities are rationed or unavailable and local prices are erratic; food is at times very scarce; and steady wage employment is nonexistent so that people must make a living from self-employment in little jobs. To deal with such a harsh environment, people are equipped with very little in terms of advanced technology and accumulated assets. Financial institutions are either absent or inefficient and expensive, and in many places, inflation is rife so that the cost of hoarding money is high. In response to these extremely difficult conditions, rural societies have developed sophisticated ways...

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