Poverty dynamics revealed in production performance and forestry in improving livelihoods: the case of West Anhui, China

Using distance function model and data envelopment analysis, we measure the productivity of rural households in Jinzhai, a well-known poverty county. We find that most of them improved their productivity in the 1980s, and a small number did so throughout the period of 1978–1997. For the group as a whole, however, its productivity growth and income increase were abysmal, because, among other things, expenditures increased at faster pace than revenues. This is well reflected in forestry, whose potential in reducing poverty and improving livelihoods has been constrained by government market control. Also, the wide distribution of household performance suggests that many failed to move closer to the production frontier, let alone to push it out to a higher level. Further, the adoption of the household responsibility system contributed to technical change, which played an important role in driving the productivity growth in the early 1980s, but the uncertainty associated with the contract expiration/renewal in the early 1990s led to negative technical change and thus productivity decline. Removing the institutional and technical impediments is thus essential to reduce poverty.