The impact of cocoa cultivation on poverty levels: Regional evidence from Peru, 2008-2019

Cocoa production in Peru has seen remarkable growth in recent years, positioning it as a potential driver for poverty reduction. This study examines the relationship between cocoa cultivation and poverty levels in cocoa-producing regions during the 2008-2019 period. The analysis employs panel data regression models estimated using pooled OLS, fixed effects, and random effects approaches. To address omitted variable bias, control variables, and the Two-Stage Least Squares (2SLS) estimator are incorporated. The results indicate that a 20 % increase in productivity leads to a 0.2 percentage point reduction in poverty rates, while price fluctuations have no significant effect. These findings underscore the importance of policies focused on enhancing cocoa productivity as a means to alleviate poverty.