A Village-level Economic Evaluation of the Southwest Poverty Reduction Project
AdvisorBlair, Benjamin F.
This research evaluates the post-program treatment effects of the Southwest Poverty Reduction Project (SWPRP), a large-scale ($463.55 million) rural development project jointly funded by the World Bank and the Chinese Government from 1995 to 2001. The SWPRP aimed at reducing poverty and increasing living standards for the absolute poor in southwest China. The treatment effects are measured by the changes in 21 indicators at the village level. The dataset for this research includes 327 project villages and 3887 non-project villages in Guangxi Zhuang Autonomous Region. Rigorous econometric methods are employed to remove selection bias. A probit model is established to investigate the selection rule of the project villages. In addition to the control function approach, different methods of propensity score matching such as nearest neighbor, caliper or radius, and kernel-based matching, are used to estimate the treatment effects, including the average treatment effect, average treatment effect on the treated, and average treatment effect on the untreated.The evidence from the treatment effect estimations shows that the SWPRP achieved its overall objective but not necessarily all specific objectives. The evidence supports a statement of significant impacts on farming, off-farm employment, and infrastructure by the project investments, while there is no strong evidence to support a conclusion of significant impacts on primary education and rural healthcare services. The poverty rate in the project villages was reduced by about 3.0-3.3 percent and net income increased by about 24-26 Yuan. Further investigation of the specific treatment effects on individual villages expose that the treatment effects vary with land resources in the villages. Lastly, the project was successful in targeting the poorer villages but not necessarily the poorest.This research also reveals some findings of practical relevance for social program design. The approach of integrated policies proves to be effective in large-scale poverty reduction. However, designers should be aware that households may trade off one activity against another to maximize their utility rather than simply follow the whole package of integrated activities. In addition, the minimization of operational costs of the project agents should not be detrimental to the effectiveness of the project.