ch9&11(sheila) - DEVELOPMENT ECONOMICS ECOS 3002...

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DEVELOPMENT ECONOMICS ECOS 3002 Second Semester, 2009 Week 7(chapter 9): Agricultural Development The Imperative(necessary) of Agricultural Progress and Rural Development -Large population (3.3billion) live in rural area in2007.65% in sub- Saharan Africa -2/3 of poor people lives in rural area and engaged primarily in subsistence agriculture. -800 million people do not have enough food to meet basic nutrition needs. -core problem in rural area: wide spread poverty, growing inequality, rapid population growth The heavy emphasis in the past on rapid industrialisation may have been misplaced The agriculture sector in particular and the rural economy must play indispensible part in strategy of economic progress, especially for low- income developing countries. Agricultural development is now seen as an important part of any development strategy 3 basic complementary elements: 1) accelerate the output growth( via technological, institutional, price incentive changes 2)rising domestic demand for agriculture output (derived from an employment-oriented urban development strategy). 3)diversified, non-agricultural, and price incentive rural development activities that directly and indirectly support and are supported by farming community. Without agricultural development, industrial growth either would be stultified or if succeeded, would create such severe internal imbalance in the economy(wide spread poverty, inequality, unemployment). Agricultural Growth: Past Progress and Current Challenges Agriculture accounts for a much lower share of total output
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-Problems in the agricultural sector can suppress incomes, encouraging more migration to the urban informal sector. -Labor > Output in agricultural sector(relatively low productivity in agriculture). Agricultural production is rising but unevenly (Figure 9.2) Performed well : In Asian developing countries, production is triple in 2005(compare to 1960). Latin America and South Asia Performed bad: Sub-Saharan Africa only increased 1/3 yield(as larger population size, reusing land with too little rest, deterioration of soil nutrient, can’t but modern seeds, fertilizer, and other essential of modern agriculture poverty trap.) Low land productivity in developing countries (Table 9.1) -80%-90% share of labor force but only half share of GDP -Share of agriculture in GDP when GDP per capita - Sometimes, share of labor declines greatly even when GDP per capita does not increase much at all(Nigeria and Brazil) Reasons for poor performance: 1. accompanying bias toward investment in the urban industrial economy 2. urban growth( massive migration of rural move to cities) Challenges: Right Role of government -sometimes government interventions do more harm than good(requirements for farmer setting low price) -production subsidies are not efficient( market failure: environment externality) -effective in providing institutions and infrastructure 2
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ch9&11(sheila) - DEVELOPMENT ECONOMICS ECOS 3002...

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