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MOTIVATION
Where should a country invest its money? How policymakers answer this complex question can have an impact on the welfare of their constituents—especially those living in poverty—for generations. In the mid-1990s, China had a significant number of poor and undernourished people. Where the government chose to invest its money had the potential to change the country’s label from “low income” to “middle income.” China’s large rural population needed more effective government policies to stimulate agricultural growth and ensure that smallholders had avenues to prosperity, either through increasing agricultural productivity or moving into new sectors when farming was not viable. From 1998 to 2002, IFPRI’s Priorities for Pro-Poor Public Investment in Agriculture program provided the Chinese government with research-based evidence to help determine where to invest its resources and how to use them more efficiently to reduce poverty and food insecurity.
OUTCOMES
The program produced a series of policy research reports used by national and regional policymakers in China to evaluate the impact of public investment in different sectors and set future investment priorities. Research results demonstrated that investments in agricultural research, rural roads, and education do the most to promote rural economic growth and reduce poverty. Other investments, particularly in irrigation and some welfare programs, proved much less effective on both scores. Results also showed that building low-cost roads, such as basic rural feeder roads, yielded returns four times greater than building higher-quality roads. Investment in low-cost roads in both rural and urban sectors also led to greater poverty reduction. Regional analysis suggested that investments in less developed areas of the country not only offer the largest poverty reduction per unit of spending, but also produce the highest economic returns. The research results, which provided practical information and recommendations, informed and influenced Chinese and other policymakers in a number of ways.
- Immediately after the program’s final dissemination conference in Beijing in 2002, IFPRI’s director general briefed Chinese President Jiang Zemin on the project findings.
- The 2008 World Bank World Development Reportused IFPRI case studies on the returns of public spending in China to argue for a reversal of the declining trend in government budget allocations to the agriculture sector.
- Research on public investment in China was a catalyst for opening the International Center for Agricultural and Rural Development, jointly launched by the Chinese Academy of Agricultural Sciences and IFPRI in 2003. The Center supports evidence-based, pro-poor decisionmaking in China and promotes policy dialogue and mutual learning among China and other nations.
- An external impact assessment found that IFPRI’s public investment work in China had many positive impacts.
- The government of China implemented a number of policies consistent with IFPRI’s recommendations. These included increasing public spending on agricultural research and development and rural infrastructure; instituting free compulsory education (in 2008); abolishing agricultural taxes; and shifting regional resource allocations toward China’s poorer western regions.
- The impact assessment found evidence that IFPRI’s work has had “an important indirect role” in the development of China’s Eleventh Five-Year Plan (2006–2010).
- The impact assessment reported praise for IFPRI for holding nine training sessions at Zhejiang University to educate professionals—both from China and other developing countries—on China’s experiences in promoting rural development and poverty alleviation.
