2015-03: Agricultural productivity and pro-poor regional growth: A computable general equilibrium analysis of India (Working paper)

Abstract

Recent focus on poverty alleviation under the United Nations Millennium Development Goals has led to a renewed interest in understanding the regional or State level economic impacts of agricultural productivity improvements within the context of emerging and developing countries. However, the empirical evidence on this linkage has been ambiguous. India makes an interesting case study to understand this linkage as it has the largest concentration of poor despite being one of the world's fastest growing economies (Topalova, 2008). Hence, this paper develops the first ever State-level "bottom-up" Computable General Equilibrium Model for India in order to analyze the above linkage within a general equilibrium framework. Overall, the results suggest that, in the long run, improvement in agricultural productivity has a beneficial impact on agricultural States. Furthermore, the States that contain a higher percentage of rural poor have also been stimulated well above the national average, which highlights the pro-poor growth effects of agricultural productivity improvements.