Effects of Road Access on Household Production, Expenditure and Savings in Rural Areas: Based on the Rural Survey of Vientiane Province in Lao PDR

Type Working Paper
Title Effects of Road Access on Household Production, Expenditure and Savings in Rural Areas: Based on the Rural Survey of Vientiane Province in Lao PDR
Author(s)
Publication (Day/Month/Year) 2013
URL http://libdspace.biwako.shiga-u.ac.jp/dspace/bitstream/10441/11176/2/DPA5Kim201302.pdf
Abstract
Rural areas in developing countries play an important role not only as suppliers of food to urban areas but also as consumers to consume industrial products produced in urban areas. Increasing income in rural areas will accelerate the growth of the industrial sector in urban areas. Poverty in rural areas results from low incentives for production expansion beyond subsistence agriculture because of the poor accessibility to market. We estimated the effects of road access to urban markets on household production, expenditure and savings in rural areas. The result of the estimation implies that accessibility to urban markets has a significant impact on agricultural production by improving productivity in rural areas, and impacts positively on consumption and savings as well. Many villages are not linked to the main road network and have limited access to urban markets. Better road access would allow farmers all season access to urban markets and expand agricultural production by improving productivity. We found that there was a close correlation between the transport infrastructure and poverty alleviation especially for remote rural areas. However, there is a serious shortage of funds to develop infrastructure due to the budget deficit. This survey found that over 85% of households kept money in their home and more than half of households paid money to the community. Also, over 20% of households invested their money in gold in rural areas. Therefore, a financial intermediation function which collects money from households and lends it to encourage the expansion of agricultural production, new businesses and investment in infrastructure is important for poverty alleviation in rural areas.

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