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Chapter

Agriculture and Development Brief Summary (Ch 11)

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Department
Economics
Course
ECON414
Professor
Neil Hepburn
Semester
Fall

Description
Ch 11 – Agriculture and Development In general, the more people employed in the rural agricultural/cottage industries, the lower the GDP/capita of the country as agriculture contributes only a small portion of GDP. The marginal value of workers in this sector is extremely low. And yet, agri-development is almost never a central developmental focus. Why? Agriculture is shrinking, both in number of people employed as well as output. Today: - Pressure to grow cash crops - Pressure to move towards social justice (land reform, address malnutrition) - Pressure to be environmentally friendly Why are low income countries doing the worst? Food production is dropping faster than population growth rate, leaving less food for respectively more people. Urban and Landlord Bias - Urban bias (Michael Lipton, 1977): policy makers live in urban areas, therefore they focus on developing urban areas o Countries with low urban bias see lower emigration, increased cultivator investment, technological adaptation, and higher growth in the economy - Landlord bias: stall land reform, drive down labour wages, pressure gov’t programs to benefit their own lands, control most of the income Culture and Caste - Cultural divide: small cultivators are viewed as ‘less’ than the urbanites o Lack of education available in rural areas prevents these people from moving up to better jobs - Race and Gender o Minority races are seen as inferior o Women (in almost every country, regardless of income) are seen as inferior Inadequate Infrastructure - Lack of schools, hospitals, roads, bridges, irrigation, research, easy water access - State can’t afford long term investments and upkeep, so they don’t undertake them Agrarian Dualism During colonization, social elite were installed to control agriculture output, regardless of former land holding practices. Native peoples were often forced off their lands. The systems often exist to this day, a few wealthy families control the majority of the arable land, and almost all of the fertile, productive lands. With so many people on such a small amount of land, more problems arise. Land is overgrazed, forest cleared, nutrients leached, land compacted, fallowing is out of the question, soil erosion is huge, water runoff is increased. This contributes to pollution from poverty from subsistence agriculture. Green Revolution (environmentally sustainable growing practices) technologies have been used in middle income countries to mitigate these problems and significantly increase output. Primary Product Mono-Exporters Many low income countries focus on exporting one main product; when production or prices fall (terms of trade diminish), the economy fails. These countries are ‘macro-economically unstable.’ Dutch Disease and Boom & Bust Cycles Macroeconomic instability can cause boom and bust cycles; if a certain product drops in production elsewhere in the world (ex: drought, flooding, or hail destroy grain crops in the USA), a mono export country’s export prices of that good may increase as the product demand increases. This increases the dollar value of the mono export country, which makes imports cheaper. The cheaper imports undercut import substitution industries (ISIs), and the new wealth causes domestic inflation. Non-traded goods and services, like internal transportation, are also affected. The overall growth of the economy slows. This has been dubbed ‘Dutch Disease.” When the mono exporting country’s product price falls, income falls, exports are worth less, and imports are cheaper, but ISI industries may be permanently shut down due to the initial ‘boom.’ Peasant Agriculture and Small-scale Cultivators Peasant agriculture: peasant farmers combine non-market and market production. They usually grow crops to feed their families, raise animals, keep gardens, are hired out as seasonal labour, and perform other activities to earn income. These activities typically include all members of the family. Agricultural practices typically involve old and new technology, such as hand seeding and oxen-pulled-ploughs next to genetically modified seeds and chemical fertilizers. Attitude toward risk and change Change is slow for 3 reasons: - Ceremonialism: cultural resistance - Risk aversion: small cultivators are poor and can’t afford to risk losing their only income - Lack of capital/credit with which to acquire/use new technology Are peasants efficient producers? 3 perspectives: - Hidden potential: the inefficiency of agri workers meant that many labourers could be shifted to the industrial sector, increasing output there while not changing agri output - Chicago School approach: argues agri workers are efficient; with their given inputs and income, there’s no way for them to be any more efficient. This view is strongly contested as it was based on a very small, and arguably misrepresentative, study - Argi workers remain on their land because to have even minimal labour leave to find other income would result in decreased output and subsistence levels would not be maintained GMOs Green Revolution: 1968, referred to technological change to improve crop yield through new seed strains because elite feared an uprising by the peasant sector. However, these seeds were expensive, required irrigation, and were prone to pests and disease. Small-scale farmers, being more risk aversive, wouldn’t often change to the new seed anyway, and would then be further out-competed by larger farms. However, in cases where there was also some land reform (ex: Uttar Pradesh limited irrigated lands to ~7 acres/farm holder), small scale farmers more often adopted the new high yield variety crops and agricultural production increased, along with income to peasantry.
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