Abstract

This paper takes advantage of nationally representative cross-sectional household data sets from 1993, 1997 and 1999, to examine changes in poverty in one province of Madagascar, Fianarantsoa. The authors find that poverty in this province rose from an already high 74 percent in 1993 to 81 percent in 1999. This pattern of change, which corresponds to the evolution of macroeconomic policy during this period, was restricted primarily to urban areas. Populations in rural areas witnessed persistent increases in poverty despite market reforms, as structural constraints affected their ability to escape poverty. A strong correlation between remoteness (as measured by various proxies) and high levels of poverty support this finding. Small scale agricultural households were hit particularly hard in the 1990s, and the data suggest that these are the very households that have been extending their land use by clearing and cultivating increasingly fragile lands. The use of models of household consumption to decompose changes in poverty into returns and endowment effects, substantiate the hypothesis that decreases in land productivity among these small-holders contributed to increases in poverty. These decompositions also reveal that increased access and returns to education between 1993 and 1999 contributed to declines in poverty.

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