APPROVAL FOR PROJECT IMPLEMENTATION OF "TECHNOLOGY, POLICY AND RURAL INCOMES"

EGC will first construct a distributional policy analysis model for India and estimate its parameters econometrically. The model will be designed to simulate the effect of macroeconomic developments and policies on the quantities and prices of commodities produced and the factors of production used in agriculture (labor, power, fertilizer, land). It will be applicable either to small regions or to aggregates of several small regions linked by national commodity markets. The policy instruments and related exogenous forces to be considered include such factors as population and labor force growth, inter-regional and inter-sectoral labor force migration, technical change, employment schemes and input subsidies. Available field-level data from India, and Philippines and Bangladesh will be used in the model parameter estimation. Second, EGC will apply this model to perform economic research in all three country cases. The effects of technological and national policy changes in areas such as those mentioned above will be estimated for these countries. The shifts to be analyzed will be designed to reflect real policy options. These estimated effects will then be related, via data on the ownership of agricultural inputs and consumption expenditures, to the income distributional impacts on various groups in society, particularly landless laborers and farmers. The model will also be applicable for simulation of policy effects other than those considered in this project.