Rural roads and markets: Impact on economy

There is mainly one reason that I have been prompted to pull the pen about the paper. And that is, it tends to discuss the impacts of transport and trading networks in stimulating growth and reducing poverty. In other words, it delves into the development of roads and markets in rural areas. Reportedly, there are 2,100 local assembly and secondary markets which are the principal centers for wholesale and retail transactions of both agricultural and non-agricultural commodities and services in rural areas. The secondary markets are connected with the regional and national arterial road networks and with the upazila (local administrative unit covering 100-150 villages) headquarters through Feeder Road Type-B (FRB). The existing poor state of the secondary markets and the FRBs, says the author, suggests that the rural economy is likely to get a boost if these markets are developed and are made accessible year round through hard-surface all weather FRBs.

There are several projects undertaken by the Local Government Engineering Department (LGED) of the government aimed at improving the rural transport and trading networks across the country. But Latif picked up Rural Development Project-7 (RDP-7) implemented in eight northwestern districts: Rajshai, Naogaon, Natore, Chapai Nawabgong, Bogra, Joypurhat, Pabna and Sirajgonj. The project comprised the following components: (a) improvement of 500 km of FRBs to bitumen-surface standard; (b) upgrading of 65 secondary markets; and (c) construction of 3,700 linear metres of bridges and culverts.

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Panel data of two time periods, collected through sample surveys conducted by BIDS, were used in the study. Eight project roads and six control roads were selected. Again, three villages were purposively selected from arch project and control road by taking two villages form roadside area and one from remote area.

In this context, we need to know the ways infrastrucures tend to maximize the objective function. Admittedly, the immediate impact is on employment and income -- especially of the landless households -- not only in construction and maintenance but also in transport

and ancillary activities. Second, improvement in frastrucure is likely to make labour market more flexible and thus enabling greater mobility and malleability. Latif observed that the nominal wage of male agricultural workers has increased during the inter-survey period at a slower rate in the project villages compared with control villages in both peak and slack seasons. Third, development of infrastructure help unhindered movements of inputs to ensure lower prices to farmers. The author noticed that the changes in the urea and TSP prices were more favourable in the project villages compared to control villages. Likewise, infrastructure helps diffusion of irrigation technology at a faster rate. Transportation of machinery for drilling shallow/deep tube wells is easier in the areas where road network is well developed. Not surprisingly, perhaps, the researcher observed more tube wells in project villages than in others. What is more important is the reduction in irrigation cost that should follow from good transport, good maintenance and good care. The author of the paper found that irrigation cost increased by 24-36 per cent in control villages but declined by 3-17 per cent in project villages. Fourth, the output prices were relatively more favourable (higher) to farmers in project villages compared to control villages.

As far as employment is concerned, the proportion of self-employed earners engaged in crop production has mainly fallen in both project and control villages. Also, the proportion of agricultural wage-work has fallen but at a faster rate in project villages. But as elsewhere in Bangladesh, the proportion of earners in non-agricultural activities surged. "Thus a larger shift from low-wage agricultural work to better remunerative non-agricultural jobs (wage-work and /or self-employed) has taken place in the project villages compared to control villages during the inter-survey period".

Latif also landed with an eloquent exposition of how there occurred changes in consumption pattern since the start of the projects. Finally, he took resort to the famous regression analysis for determining the relationship between the dependent variables( e.g. income, poverty, employment) and the explanatory variables e.g. development of road, proximity, household characteristics etc. He observed that his empirics accept the hypothesis that the development of transport and trading infrastructures has independent positive impacts on income, consumption and poverty reduction. Especially, development of infrastructure has significantly contributed in reducing the incidence, the depth and the severity of poverty.

We can imagine that besides the impacts on income, consumption and poverty, development of roads especially of markets could have caused a change in resource allocation at farm level. The shift could be from low to high value agriculture, from subsistence mode of production to commercialisation and also from low productive non-agriculture to high productive non-agricultural activities. I am told that the International Rice Research Institute (IRRI) already initiated a study on the impact of the Bongabandhu Bridge in the transformation of rural livelihoods in some selected villages of northern districts. But whether completed or ongoing, a priori reasoning would suggest that development of rural roads and markets is likely to cause positive impact in terms of income generation and poverty alleviation. The policy conclusion is simple. Turn rural areas into growth centres or semi urban areas by building roads and other infrastructure. That would enhance the productive capacity of the poor and the potentials of the sources from which they are likely to eke out their living. This would mitigate the migratory movements. Let our policies have atleast some element of pro-rural bias -- just the opposite of what Michael Lipton lamented long before to have observed: "urban-bias".

Abdul Bayes is Professor of Economics at Jahangirnagar University.