DOES TECHNICAL PROGRESS IN AGRICULTURE ALLEVIATE POVERTY? A PHILIPPINE CASE STUDY*

Abstract

We examine the impact of technical progress in agriculture on changes in measured poverty and aggregate welfare in a developing country. Using a small general equilibrium model, we show how the economic components of an observed change in poverty can be isolated to expose the significance of intersectoral linkages and the economic roles of changes in relative commodity and factor prices. Variation in the measured rate and distribution of poverty alleviation depends somewhat on the choice of poverty measure, but more substantively on structural assumptions and the effects of policy interventions in agricultural markets.