Agriculture and development Flashcards
The role of agriculture in development
- Agriculture= large sector in poor countries
- accounts for large share of GDP and employs large share of population
- by implication: agriculture = low productivity sector
Poverty in rural areas
Poverty prevalent in rural areaswhere agriculture dominates employment, production and income
Why does agriculture develop differently in different countries:
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
APG Agricultural Productivity Gap
- 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
APG examples
if agriculture is productive, APG near one. in dev countries = 4
Why is agriculture so unproductive in poor countries?
1) Technology
2) Institutions
3) Infrastructure - agriculture has a large spatial dimension makes distsnce and infrastructure important
Agriculture in poor countries
Less productive than potential
CONSTRAINTS ON TECHNOLOGY:
- Profitable however:
1) risk / insurance
2) lack of info
3) lack of skills / training
If technology is available, why is uptake low?
even when costs are low (subsidies) uptake of tech is low
- price, weather, limited access to credit and insurance, risk aversion makes sense
subsistence farmers:
technology low mean per hectare with low variance > high yielding high risk technologies
Weak instituions
Lead to lower productivity
Why do weak institutions lead to lower productviity
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
sharecropping
-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
where does sharecropping take place
india, pakistan, bangladesh
ISSUES WITH SHARECROPPING
-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
