Abstract
Using state-level data for 1970–93, a
simultaneous equation model was developed to estimate the direct and
indirect effects
of different types of government expenditure on
ruralpoverty and productivity growth in India. The results show that in
order
to reduce rural poverty, the Indian government
should give highest priority to additionalinvestments in ruralroads and
agriculturalresearch.
These types of investment not only have much larger
poverty impacts per rupee spent than any other government investment,
but also generate higher productivity growth. Apart
from government spending on education, which has the third largest
marginalimpact
on ruralpoverty and productivity growth, other
investments (including irrigation, soil and water conservation, health,
and
rural and community development) have only modest
impacts on growth and poverty per additional rupee spent.
Key words
This Article
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Am. J. Agr. Econ. (2000) 82 (4): 1038-1051. doi: 10.1111/0002-9092.00101
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