IFAD Research Series No. 22 - Poverty Reduction During the Rural-Urban Transformation : Rural Development is Still More Important than Urbanization

Based on cross-country panel datasets, we find that (i) an increase in population share in agriculture is associated with poverty reduction once the longer-term poverty change or dynamic is taken into account; (ii) the rural non-agricultural sector also is poverty-reducing in some cases; and (iii) increased population in the megacities has no role in poverty reduction. In fact, the growth of the populations in megacities increases poverty in a few cases. Given that rapid population growth or rural-urban migration is likely to increase poverty, more emphasis should be placed on policies that enhance support for rural agricultural and non-agricultural sectors. If our analysis has any validity, doubts are raised about recent research that emphasizes the role of secondary towns and urbanization as the main drivers to reduce extreme poverty