W arthur lewis disguised unemployment in rural areas

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Unformatted text preview: economies of scale in agriculture Large farms may actually be more productive in the absence of market distortions Potential rural unrest? Landlords are bound to resist, use all mechanisms at their disposal to evict, evade, avoid loss of land Where land reforms are successful class resentments can createbasis for factionalism, rebellion (sender luminoso in peru, naxalites in India) Climbing the value- added chain? Agriculture value added as % of GDP Industrialize and also improve agricultural output has been overall over- arching objective of rural development Traditional perspectives on agricultural economies: Primary- product exporters (PPEs) ! low VA (limited processing, derivatives) Main objective should be urbanization and industrialization at the same time Urban- industrial views of development ! W. Arthur lewis ! disguised unemployment in rural areas of poorer countries, where the marginal producvtivity of labor is low, so migrants to the city will find more productive jobs pull their families out of poiverty Hans Singer, Raul Prebisch ! long- run tendency for the terms of trade to move against primary goods (what you export for what you import, with costs of imports tending to rise vs. costs of exports) Prevailing view that cities benefited from economies of scale All these have been disputed; but this has been the basis for the URBAN BIAS THESIS in understanding agriculture policy URBAN BIAS (naïve version) First proposed by Michael Lipton (1961)!five points Rural areas of PPEs suffer fromm too little (relative) spending on education and health People in rural areas are forced to pay a higher share of national taxes (notwithstand...
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