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Canada (510,616)
POL201Y1 (221)
C Jung (55)
Lecture 7

Lecture 7

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Political Science
C Jung

Government Failures in Development Elements of Agricultural Policy - Cost of inputs - Cost of outputs - Cost of secondary/manufactured goods Government intervention: - Decrease the cost of inputs - Increase cost of manufactured goods - Decrease cost of outputs Governments depress the price of crops - Through monopsonies o Marketing structure that sets the price for the crop o Farmers cannot sell their product themselves, they have to sell it to a board that then sells it through stores o Farmers who can’t sell their product on an open market is called a monopsony - Use monopsonies to control domestic prices o Famers get less than what the product is on the international market to get a surplus in profit - Where does the surplus go? o Higher salary for the company running the monopsony o Urban industrialization- manufacturing sector to process more product  At the expense of the agricultural sector - Governments try to keep the price of domestic product low o Because they want cheap food for labour, to keep workers happy, and to avoid situations where there are food riots, policy benefiting rural workers at the cost of smaller profit for farm owners and producers - Governments have less control over food crops rather than farm crops because they can sell privately in a private market. Governments Intervene in the market for manufactured items (secondary goods) - Decrease: prices for agricultural produce - + - Increase for manufactured goods - = - Purchasing powers of farmers
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