The seminar will present findings from a research project examining critical components of pro-poor agricultural growth and of policies that can promote such growth in poor rural economies in South Asia and Sub Saharan Africa. Agricultural growth, critical in driving poverty reducing growth in many poor agrarian economies in the past, faces many difficulties in today's poor rural areas in South Asia and Sub Saharan Africa. Some of these difficulties are endogenous to these areas while others result from broader processes of global change, but another major difficulty may be current policies, which emphasize the benefits of liberalization and state withdrawal but fail to address critical institutional constraints to market and economic development in poor rural areas.

This broad hypothesis was tested in an analysis of the returns (in agricultural growth and poverty reduction) to different government investments in India over the last forty years. The results reject the alternate hypothesis underlying much current policy and demand a fundamental reassessment of policies espousing state withdrawal from markets in poor agrarian economies. Given widespread state failure in many poor agrarian economies today, particularly in Africa, new thinking is urgently needed to find alternative ways of 'kick starting' markets - without creating rent seeking opportunities, or crowding-out private sector investment.

Empirical work on Malawi and Zimbabwe highlighted very diverse constraints, opportunities and behavior among different household types and confirmed the importance of smallholder agricultural growth for poverty reduction through its impacts on labor and grain markets (even where it accounts for less than 50% of direct rural incomes). However, large productivity increases are needed from labor saving technical change, backed up by longer-term tradable non-agricultural growth drivers for sustained poverty reduction. Where productive labor demanding technologies exist, there are large potential pro-poor growth benefits from reduced transaction costs in agricultural markets and from increased smallholder household liquidity. Liquidity constraints lead to important synergies between some forms of welfare support and agricultural productivity and growth, while institutional development is needed to improve access to input, output and financial markets. Market intervention policies that stimulate the development of otherwise thin food grain and input markets may stimulate pro-poor growth if practical problems in the implementation of these policies can be addressed.