Structural Change, Dualism and Economic Development: The Role of the Vulnerable Poor on Marginal Lands

38 Pages Posted: 20 Apr 2016

See all articles by Edward B. Barbier

Edward B. Barbier

Colorado State University, Fort Collins - Department of Economics

Date Written: May 1, 2013

Abstract

Empirical evidence indicates that in many developing regions, the extreme poor in more marginal land areas form a "residual" pool of rural labor. Structural transformation in such developing economies depends crucially on labor and land use decisions of these most-vulnerable populations located on abundant but marginal agricultural land. Although the modern sector may be the source of dynamic growth through learning-by-doing and knowledge spillovers, patterns of labor, land and other natural resources use in the rural economy matter in the overall dynamics of structural change. The concentration of the rural poor on marginal lands is essentially a barometer of economy-wide development. As long as there are abundant marginal lands for cultivation, they serve to absorb rural migrants, increased population, and displaced unskilled labor from elsewhere in the economy. Moreover, the economy is vulnerable to the "Dutch disease" effects of a booming primary products sector. As a consequence, productivity increases and expansion in the commercial primary production sector will cause manufacturing employment and output to contract, until complete specialization occurs. Avoiding such an outcome and combating the inherent dualism of the economy requires both targeted polices for the modern sector and traditional agriculture on marginal lands.

Keywords: Environmental Economics & Policies, Banks & Banking Reform, Economic Theory & Research, Rural Poverty Reduction, Economic Growth

Suggested Citation

Barbier, Edward B., Structural Change, Dualism and Economic Development: The Role of the Vulnerable Poor on Marginal Lands (May 1, 2013). World Bank Policy Research Working Paper No. 6456. Available at SSRN: https://ssrn.com/abstract=2268854

Edward B. Barbier (Contact Author)

Colorado State University, Fort Collins - Department of Economics ( email )

Fort Collins, CO 80523-1771
United States

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