Agriculture and development

Question 1

The role of agriculture in development

Answer 1

• Agriculture= large sector in poor countries
• accounts for large share of GDP and employs large share of population
• by implication: agriculture = low productivity sector

Question 2

Poverty in rural areas

Answer 2

Poverty prevalent in rural areaswhere agriculture dominates employment, production and income

Question 3

Why does agriculture develop differently in different countries:

Answer 3

1) Labour productivity (tech adoption)
2) Land productivity (geography / climate)
3) Land ownership

richer countries produce 2x amount of grain per hectare compared to poorer despite a far lower labour input in richer countries

Question 4

APG Agricultural Productivity Gap

Answer 4

• based on value added per worker
• VAA = value added for agriculture
• VAN - value added in non agriculutre
• value added measures the contribution of a particular sector in a country’s gdp
• APG = VAN/ LN
  ———–
  VAA / LA

Question 5

APG examples

Answer 5

if agriculture is productive, APG near one. in dev countries = 4

Question 6

Why is agriculture so unproductive in poor countries?

Answer 6

1) Technology
2) Institutions
3) Infrastructure - agriculture has a large spatial dimension makes distsnce and infrastructure important

Question 7

Agriculture in poor countries

Answer 7

Less productive than potential

Question 8

CONSTRAINTS ON TECHNOLOGY:

Answer 8

• Profitable however:
  1) risk / insurance
  2) lack of info
  3) lack of skills / training

Question 9

If technology is available, why is uptake low?

Answer 9

even when costs are low (subsidies) uptake of tech is low
- price, weather, limited access to credit and insurance, risk aversion makes sense

Question 10

subsistence farmers:

Answer 10

technology low mean per hectare with low variance > high yielding high risk technologies

Question 11

Weak instituions

Answer 11

Lead to lower productivity

Question 12

Why do weak institutions lead to lower productviity

Answer 12

1) Land rights and tenancy: limited private ownership of land, varying degrees of tenure security, weak marekts for land rental and sale

2) Poorly defined property right: less incentive to invest in land, failure to sell land

Question 13

sharecropping

Answer 13

-where farmers unable to benefit from legal ownership of scarce land, they adopt unproductive practices such as sharecropping
-landowners permit farmers to cultivate thier land in exchange for a percentage of the crop produced

Question 14

where does sharecropping take place

Answer 14

india, pakistan, bangladesh

Question 15

ISSUES WITH SHARECROPPING

Answer 15

-INTRINSICALLY INEFFICIENT
- decreases incentive to invest in the land
- if farmer doesnt recevie the full value of their labour input, only a %, dedicate less time compared to if they owned the land

Question 16

DESCRIBE GRAPH

Answer 16

• for farmer, dedicating an hour of time is an opportunity cost of alternative income forgone WA
• VAlue of marginal product of farmer is vmpl
• if farmer receives full value of thier labour, dedicate time until VMPL = WA, at efficient labour input LF
  -if farmer recevies a share of value of thier labour inout lambda VMPL=WA, inefficient amount of labour LS

Question 17

Sharecropping as a response to risk

Answer 17

for landowner: less risky than hiring labour as sharecropper has incentive to work hard on land

for farmer: less risky than renting land as costs are proportional to the amount harvested, so sinurance against bad harvest

Question 18

Infrastructure and remoteness

Answer 18

negatively correlated to productviity
- inceases transportation costs

Question 19

Policy interventions:

Answer 19

Agriculutral development
Agricultural extension programmes

Question 20

Agricultural development

Answer 20

• transition from subsistence to mixed to commercial farming
• govt can : support agricultural research
• increase infrastructure
  -decrease negatvie enviornemntal externalities: eg deforestation water pollution

Question 21

Agricultural extension programs

Answer 21

• involves training for increasing farm productivity
• farmer field schools in indonesia to provide participatory learning by doing