Transformation of Rural Economies in Asia and Africa

Abstract This chapter explores the causes and consequences of the long-term process of economic transformation in emerging economies in Asia and assesses to what extent such experience is being replicated in Africa. Economic transformation is defined broadly as the process whereby the foci of economic activities shift away from the agriculture to the industry and service sectors. We identified population pressure, modern agricultural technology, and human capital as three drivers of transformation using panel and repeated cross-section household-level datasets drawn from the Philippines, Vietnam, Myanmar, the Lao People’s Democratic Republic, Bangladesh, and Sri Lanka in Asia and Mozambique, Kenya, Uganda, and Ethiopia in Africa. Our main finding is that the three drivers interact in a distinct way that, nonetheless, defines a common regional path to emerging economies, which highlights the role of agricultural development as a strong stimulus for economic transformation. The Asian sequence wherein the Green Revolution leads to higher farm income, investment in human capital, sustained nonfarm income growth and poverty reduction is becoming increasingly apparent in Africa as well.