Description

Abstract: This article explores the useful distinction between chronic and transitory poverty in understanding rural welfare dynamics, highlighting the possibility of poverty traps and their implications for “cargo net” policies to build up productive assets and “safety net” policies to protect such assets. We discuss the methodological difficulties in identifying and explaining either poverty traps or the critical thresholds that are their defining feature. A few empirical examples from sub-Saharan Africa illustrate the likely existence of poverty traps that help to explain chronic rural poverty.