# **1. Introduction**

Rural poverty is largely neglected by policymakers in Argentina. The general urban policy bias common to many countries is accentuated by Argentina’s lack of data on rural poverty. Argentina is one of a small number of countries in the region that does not conduct regular household surveys in rural areas. As a consequence, rural areas are not included in the official income poverty figures. The limited information that is available suggests that poverty is much higher in rural areas than in urban areas. In 2001, according to a Basic Needs Index that the government calculates based on census data, 33 percent of rural residents had unmet basic needs, compared to 14 percent in urban areas.

In part, the rural-urban wedge in Argentina is the consequence of the highly skewed public investment distribution that disfavors rural people and provinces, combined with underinvestment in agriculture and policies which suppressed the rural terms of trade for many years. Moreover, the provision of rural public services is scarce in such areas as education and health care, infrastructure, and transfer programs. Moreover, the lack of public investments and services in rural areas has hit the rural poor the hardest: they cannot afford to buy privately provided services such as health and education because they lack the necessary assets and income.

Argentina’s rural population has at least three different types of livelihood strategies: (i) on-farm—agricultural-based livelihood; (ii) off-farm—agricultural and nonagricultural employment and subsidies; and (iii) a combination of (i) and (ii). Poor households’ assets and social capital, and their access to markets, services, and existing institutions, are important when addressing the livelihood of the poor.

The rural sector is important for the macro and micro economies in Argentina. Agriculture and agro-based industry account for 57 percent of all exports, 36 percent of employment, and 18 percent of gross domestic product (GDP). The rural poor and nonpoor receive the largest share of their total income—54 and 68 percent, respectively—from agricultural activities such as farming and agricultural labor. The rural nonfarm sector is also important for income and employment. The poor and nonpoor in dispersed rural areas receive less than 20 percent of their total income from the nonfarm sector. Remittances and transfers account for 27 and 19 percent of the poor and nonpoor’s total income, respectively. This information motivates this paper, which tries to shed some empirical light on poverty in rural Argentina, an area that has been neglected, for example, in terms of data collection compared to urban areas.

The analyses of rural poverty in a broad sense undertaken in this paper are based on existing literature and available data, including a rural survey from 2003 undertaken by the World Bank. This paper is the first on rural poverty based on this dataset and the rural poverty analysis includes an overview of demographic changes, poverty and inequality, and social programs and services. This paper follows official Argentine statistical classification methods: rural areas are disaggregated into two categories: (i) grouped rural 3