Despite the continuing efforts to eradicate poverty, material deprivation prevails in the
world today, where more than one billion people are below the poverty line of 1 PPP dollar a
day. It is well known that the poverty incidence as well as the poverty depth is more serious in
rural areas where residents depend on agriculture than in urban areas. In rural areas of these
low-income developing countries, markets for agricultural inputs and outputs are
well-developed, while the development of credit and insurance markets has been lagging behind.
This means that people in general, and particularly poor farmers, have few means to hedge
against the vagaries of production and price shocks that may put their livelihood at risk. Under
such environments, agricultural technologies that increase the expected profits but are
associated with intensive use of inputs and variable output levels may not be beneficial to rural
residents. Instead, the key for poverty reduction could be the balanced development of rural
markets, especially credit and labor markets, and the improvement of human capital, which
enables rural residents to utilize opportunities given by market forces.
In this presentation, I give evidence in support of this arguement, based on my field work
and microdata of rural households in India and Pakistan. Regarding labor markets, the
development of rural non-farm labor markets, which are linked with urban labor markets
through inter-regional migration, is important. Regarding credit markets, improved access to
credit for assetless or asset-poor households is critical. This line of research has become
possible through accumulation of high-quality household data in developing countries,
including the famous ICRISAT panel data from India. One of the important role of social
sciences in agriculture-related research focusing on poverty reduction could be to accumulate
such data for regions not rigorously surveyed before but with high incidence of poverty, such as
remote areas in Sub-Saharan Africa and conflict-ridden areas in Asia.