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USAID’s Dr. Rajiv Shah: “Investing in Agriculture Critical to Breaking the Shackles of Poverty”
During his remarks at the September 21 Clinton Global Initiative Annual Meeting, USAID Administrator Dr. Rajiv Shah focused on economic empowerment, and the importance of increasing agricultural productivity:
“30 years ago, if you asked the leading development experts the best way to move people out of dire poverty, they would have given you a simple answer: invest in agriculture.
That answer was based largely on a qualitative glance at world history. Almost every country that has emerged as a developed economy has done so by increasing the productivity of its agricultural sector.
The theory behind this was economics 101. In agrarian economies, boosting agricultural productivity allowed farmers to grow and sell more crops, increasing their returns. But it also had the amplifying effect of lowering food prices. Since most of those in extreme poverty spend nearly 70% of their incomes on food, small decreases in price lead to dramatic gains in real income.
But investing in agriculture was really just the start on a path to progress. A productive agricultural sector provided opportunities for farmers to move into other fields, diversifying a country’s economic base. And as agriculture matured into agribusiness – as farmers left wheat fields to work in wheat mills – they developed technologies that could fuel economic growth in new sectors.
We now have the data to back up this theory. Thanks to the latest research, we know that economic growth that comes from increasing agricultural productivity is nearly three times more effective in raising the income of the poorest than increases in manufacturing or service productivity.
So it turns out, what we thought thirty years ago was true: investing in agriculture is the critical first step to breaking the shackles of poverty.”
“If we prioritize agricultural investment; build bridges to broader economic growth; and take seriously the concept of mutual accountability; then we can generate the kind of lasting, empowering economic growth that ensures countries do not stay recipients of aid, but become donors.”