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Impact of Economic Growth and Agriculture on Rural Poverty in Sri Lanka: Logarithmic Mean Divisia Index (LMDI) Method

Silva, A.P., Guruge, T.P.S.R., Udugama, J.M.M. and Udayanga, N.W.B.A.L.


Sri Lanka still has significant challenges in terms of poverty, particularly in rural areas. Poverty alleviation has been one of the major concerns in the country for years and it has not been successful addressed as per the findings of the study. This research was conducted to determine the extent of poverty by looking at it from several different angles utilizing innovative methods such as the Logarithmic Mean Divisia Index (LMDI) method and the grey relational analysis method. By bringing the LMDI method into the realm of rural poverty, this study achieves a secondary goal of providing some more insights to future researchers in the sector. The findings show that rural poverty in Sri Lanka has not been relieved by the country's overall economic growth. The number of individuals who live in poverty in rural regions has decreased, yet there are still a number of key factors that contribute to poverty in rural areas. However, the reciprocal of rural agricultural outcomes influences the level of rural poverty unpredictably, with positive and negative waves occurring in irregular patterns. The incidence of poverty takes a turn for the worse. The results of agricultural endeavors, on the other hand, have been shown to contribute to the reduction of poverty in rural areas. In light of this, it is suggested that ultimate poverty alleviation could be achieved by focusing on the most appropriate segment for the rural sector.


KEYWORDS: Grey relational analysis, LMDI method, Poverty alleviation