Presentation.final.comprehensive

7/31/2019 Presentation.final.comprehensive

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Content

Resource Exploitation

Resource Conservation

Location theory

Diffuse Theory

High-Payoff Inputs

Activities Specific to the Agricultural

Sector

Macroeconomic and International

Action


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Resource Exploitation

Means of generating increased agricultural production is to expand theuse of land and labor resources. The development of agriculture during

colonization was based on using new lands and indigenous labor.

The opening up of forests and jungles by local populations in parts of

Africa, Latin America, and Asia provide additional examples of expanded

resource use. Economists call this increased use of land and labor:

expanding the extensive margin.

In many colonies, exports of primary production were extracted for use in

more developed countries and the local countries gained no benefits.

In areas of Latin America and Africa where additional land does exist,

disease, insect, and soil problems prevent its use in agriculture.

However, as resources started to become scares, there was a realization

that most growth in per capita agricultural output will have to come frommore intensiveuse of existin resources.


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Resource Conservation

Many methods were used to achieve more intensive resource usage. Use of more intensive crop rotations, green manuring, forage-

livestock systems, drainage, and irrigation. These measures

improved land productivity.

In the mountainous regions, terrace cultivation was practiced toconserve soil, increase productivity and also bring new land under

agriculture.

Production of more crops per unit of time through altering cropping

patterns or using shorter season varieties so that two and threecrops can be produced per acres per year where one or two was

produced before.

Hayami and Ruttan estimate that agricultural development based on

similar types of conservation has been responsible for sustaininggrowth rates in agricultural production in the ran e of 1 ercent er


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Location theory

The pattern and intensity of agricultural production vary inrelation to the proximity of urban-industrial centers and tothe quantity and quality of transportation.

Closeness to cities and transport matters because of

differences in transportation and marketing costs, in effectson labour and capital markets, in the ease of obtaining newand more productive inputs, and in ease of informationflows.

One implication of this location theory of agriculturaldevelopment is that countries should encouragedecentralized industrial development, particularly in themiddle and late stages of development. During thesestages, strong linkages between agriculture and marketsfor inputs (fertilizers and pesticides) and outputs can help

stimulate the local economy. Developing nations shouldimprove transportation infrastructure in rural areas.


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Diffuse Theory

Stress the importance of linkages among themselves.

Existing technologies and economic knowledge can betransferred from the more progressive to the laggingfarmers, thereby increasing productivity. This idea has

provided part of the rationale for agricultural extensionsystem.

Unfortunately, in some cases diffusion theory has led tounrealistic expectations of the size of potential productivitygains under the existing level of technology.

Diffusion theory also has led to attempts to directly transferknowledge and technologies from more-developed to less-developed countries.

More success has been achieved with transferringknowledge than with transferring agricultural technologies.


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High-Payoff Inputs

More recent agricultural development theory builds on

these earlier approaches but adds the important dimension

that the process can be accelerated through provision of

new and improved inputs and technologies (particularly

improved seeds. fertilizers, pesticides, and irrigationsystems). This approach, articulated by Schultz in

Transforming Traditional Agriculture.

Farmers in traditional agriculture are rational and efficient

given their current resources and technologies. What these

farmers need are new high-payoff inputs and technologies

to increase their productivity.

Example: green revolution


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Critics of High- Payoff Input

High-payoff input theory is incomplete becauseit fails to incorporate the mechanism thatinduces these new inputs and technologies tobe produced in a country.

The theory also fails to explain how economicconditions stimulate the development of publicagricultural experiment stations and educationalsystems.

It does not attempt to identify the process bywhich farmers organize collectively to developpublic infrastructure such as irrigation anddrainage systems.


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Activities Specific to the

Agricultural Sector Land, credit, pricing, marketing, and research

policies are all critical to development andadoption of appropriate technologies and foragricultural development in general.

Sources of agricultural growth change overtime, and few countries today are able toachieve substantial production increases by

expanding their land bases.

In addition, land currently in production is beingdegraded in many countries due to population

and other pressures on a fragile natural


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Continued

Ownership of land and other assets is highly unequal inmany countries and fragmented in others. Hence oneinstitutional component of an operational agriculturaldevelopment strategy is to reexamine the arrangementsgoverning land ownership and use and to make anyneeded adjustments.

Improved transportation, marketing, and communicationssystems also become critical as development proceeds.Lower transportation, marketing, and communicationscosts can reduce transactions costs and improve

information flows, and thereby facilitate broad-basedagricultural growth. Isolated regions tend to be poorregions.

Provision of high-payoff inputs and credit to finance theirpurchase are additional components of a successful

agricultural development strategy. Farmers are rationaland relativel efficient iven their current resources.


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Continued

Consequently new inputs embodying improvedtechnologies are needed to improve theproductivity of farmers in developing countries.

Research and technology transfer policies canfacilitate the development and adoption of thesetechnologies. In addition, pricing policies should bedesigned so as not to discourage the use norencourage the abuse of improved inputs.

Educational levels of farmers also must beincreased to improve their ability to recognize thebenefits of and to use the technologies. Educationimproves the capacity of people to assimilate anduse information and thus can help reducetransactions costs.


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Macroeconomic and InternationalActions

Agricultural development is affected bymacroeconomic and trade policies that arise outsidethe agricultural sector such as the levels and typesof taxes, spending, and government borrowing candramatically influence farm prices and input costs.

Exchange rates, or the value of the countryscurrency relative to currencies in other countries,can have major effects on domestic agriculturalprices and trade.

In some countries, foreign debt repaymentssignificantly constrain growth and reduce domesticconsumption. Internationally influenced interest ratesand prices vary substantially over short periods,

adding an additional measure of unpredictability todebt levels and national incomes.


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Continued

International labour markets for agriculturalscientists mean that high salaries draw some ofthe brightest and most educated scientists tomore developed countries and internationalagencies.

Foreign aid is a source of capital and technicalassistance for some countries, but is oftenunreliable and usually comes with stringsattached.

Developing countries must carefully designmacroeconomic and trade policies that do notdiscriminate against their agricultural sector ifthey expect it to grow.


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