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Rural Poverty Determinants in the Remote Rural Areas of Kyrgyzstan

A Production Efficiency Impact on the Poverty Level of a Rural Household

Series:

Kanat Tilekeyev

This book is a study about rural poverty in the remote rural area of Kyrgyzstan. It analyses the linkage of poverty with the limits of production frontier efficiency of the rural households in the selected area. A field survey of the cross-section random sample collects primary information about 297 rural households. This allows to measure rural poverty and frontier production efficiency of a sample, using Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) methods. The empirical results demonstrate statistical significance of the poverty-efficiency linkage in the case of simple and multivariate linear regression. The endogeneity problem is resolved with the proposed instrumental variables, not correlating with the wealth of the household, but affecting the technical efficiency.
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3. Theoretical Background

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3.Theoretical Background

This chapter consists of two blocks and describes the review of theoretical thought dedicated to poverty and production efficiency problems. The first part is a review of the poverty measurement thought, which helps to formulate the definitive part of the problem the methodology of poverty measurement, international practice and standards, poverty indicators and measurement issues.

Separately analyzed is an approach to practical poverty measurement based on the specific circumstances of Kyrgyzstan. The second part is devoted to production function theory developments relating to measuring productivity and efficiency on a microeconomic scale. Two main frontier efficiency analysis methods are reviewed the Data Envelopment Analysis (DEA) and the Stochastic Frontier Analysis (SFA), with their specific assumptions and specifications.

3.1.1Poverty Measurement Tools

The definitive part of poverty measurement approaches and methods is important as it is directly influenced the results of the empirical analysis of poverty. The description of the main components and parameters of poverty analysis helps us to concentrate our attention on the practical application of the poverty analysis and its linkages.

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