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Macroeconomic growth and the problems of the alleviation of rural poverty in transitional Russia

Citation

Takeda, Yuka (2007). Macroeconomic growth and the problems of the alleviation of rural poverty in transitional Russia.

Abstract

In transitional countries, the number of the people below the poverty line increased significantly as a result of transitional shocks. This situation was also observed in Russia. Following the 1998 economic crisis, the macroeconomic growth made the Russian economy sustainable for the first time since the collapse of the USSR and changed the scenarios by leading to a gradual poverty reduction. However, the prospects for poverty alleviation in
Russia are still challenging. After the commencement of economic growth, income inequality remained at a high level or even increased to a small extent. In particular, it is noteworthy that the inequality in the living standards between the urban and rural areas is increasing. In addition, the proportion of the vulnerable population still remains at a high level. In this study, we analyse the following problems. First, did the ‘fruits’ of macroeconomic growth trickle down to the rural poor in Russia? Second, what are the possible determinants of poverty reduction in the rural areas in Russia? The specific aims of the study are as follows: (1) to uncover the factors that are preventing the fruits of macroeconomic growth from reaching the rural poor, (2) to define the role of government in alleviating the rural poverty, and (3) to propose more active policies for reducing rural poverty. In this study, we employ the Russia Longitudinal Monitoring Survey (RLMS) for the period of 1994–2000 (considering the years 1994, 1996, 1998, and 2000). Considering the high proportion of the vulnerable population in transitional Russia, we take into account the poverty dynamics, i.e. the entry to and exit from poverty at the individual level during the above mentioned period. In order to analyse an effect of macroeconomic growth on poverty dynamics in the urban and rural areas and to compare the determinants of poverty reduction in these areas, we employ the multinominal logit (MNL) model. The results of this study reveal that macroeconomic growth might have a very
weak effect on the reduction of rural poverty. Therefore, we can conclude that in transitional Russia, an extremely weak linkage existed between the urban and rural economies, owing to which the (re)construction of infrastructure and innovation at the rural level were crucial for alleviating rural poverty.

URL

http://www.computer-services.e.u-tokyo.ac.jp/p/cemano/research/DP/documents/coe-f-205.pdf

Reference Type

Conference Paper

Year Published

2007

Author(s)

Takeda, Yuka