Chapter 67 Rural Poverty and Income Dynamics in Southeast Asia Many rural households in Asia have been able to move out of poverty in the presence of increasing scarcity of farmland initially by increasing rice income through the adoption of modern rice technology and gradually diversifying their income sources away from farm to nonfarm activities. Increased participation in nonfarm employment has been more pronounced among the more educated children whose education is facilitated by an increase in farm income brought about by the spread of modern rice technology. An important lesson for poverty reduction is to increase agricultural productivity through the development and adoption of modern technology which subsequently stimulates the development of the nonfarm sector thereby providing employment opportunities for the rural labor force. This chapter explores the key processes of long term poverty reduction in Southeast Asia using the Philippines and Thailand as case studies. JEL classification: O12 O15 O53 Q12 Q15