Food subsidies discussed in the previous section are an important short-run measure to alleviate the impact of raising food prices for producers. But they can be very expensive and may make, by themselves, only a limited contribution to a long-term solution. For this, it is necessary to raise the earning capacity of the poor, either by generating employment opportunities or by enabling them to grow more productively the food they themselves consume. These longer term programmes are administratively more difficult, and often run into political obstacles. Experience in India and Bangladesh has shown that the provision of credit to small farmers can be a highly productive investment and that there are few defaults.
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Notes and References
- 1.See Gustav Ranis and Frances Stewart, ‘Rural Linkages in the Philippines and Taiwan’, in Macropolicies for Appropriate Technology, forthcoming. I owe these points to Frances Stewart.Google Scholar