ABSTRACT
This paper attempts to explain why public policies that were expected to alleviate rural poverty in Pakistan have not woiked. The analysis is based on a system dynamics model that incorporates the income distribution processes of a typical developing country agrarian economy consisting of a capitalist and a self-employed sector. Only die economic factors arising out of the rational decisions of the two sectors regarding production and disbursement of income have been taken into account. These factors are considered adequate for explaining the persistence of rural poverty, although the role of social and political factors is acknowledged.
