Agriculture and Land Distribution It is in the agricultural sector - - PowerPoint PPT Presentation

Agriculture and Land Distribution

“It is in the agricultural sector that the battle for long term economic development will be won or lost.” Gunnar Myrdal Fall 2009

Huw Lloyd-Ellis () Econ 239 Fall 2009 1 / 8

Agriculture in developing countries – A brief overview

About 60% of LDC populations are located in rural areas Traditional view of agriculture: passive role in development , ! e.g. Lewis model — source of surplus labour , ! policy focus on industrialization , ! systematic bias against rural areas , ! more recent emphasis on Rural Development Policies Di¤erent “mode” of production than developed nations ) more complex than just technology transfer

Huw Lloyd-Ellis () Econ 239 Fall 2009 2 / 8

Indices of agricultural production per person (FAO)

Extremely rapid growth in Asia (esp. due to China) Signi…cant but less rapid growth in Latin Ameria and North Africa Decline followed by stagnation in Sub–Saharan Africa Collapse in transition economies after 1990

Huw Lloyd-Ellis () Econ 239 Fall 2009 3 / 8

FIGURE 15 Average growth rate in per capita agricultural value added, by region

Annual percentage change 1961–1975 1976–1990 1991–2005 Whole period East Asia and the Pacific Latin America and the Caribbean Sub-Saharan Africa South Asia Near East and North Africa

Source: World Bank, 2006. Note: Agricultural value added includes fish and forestry products. No data are available for the Near East and North Africa until 1974. Data for sub-Saharan Africa are available from 1967 and for Latin America and the Caribbean from 1965. 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

• 0.5
• 1.0
• 1.5

• 5
• 4
• 3
• 2
• 1

1 2 3 4 Percentage

Source: FAO, 2006h.

FIGURE 16 Growth rate in per capita agricultural production in sub-Saharan Africa, 1990–2004

Ghana Angola Benin Malawi Sudan Burkina Faso Mozambique Guinea Ethiopia Côte d'Ivoire Chad Cameroon Nigeria Niger South Africa Mali Uganda Kenya Zimbabwe Zambia United Republic of Tanzania Rwanda Senegal Burundi Madagascar Democratic Republic of the Congo

Latin America

High concentration of land – 2% of landowners own 72% of land Latifundio–minifundio system: Latifundio > 12 employees Medium–sized 4 – 12 Family farm 2 – 4 Minifundio < 2 Smaller farms tend to have higher output per hectare than large farms , ! underutilization of land ? , ! high supervision/motivation costs on larger farms ?

Huw Lloyd-Ellis () Econ 239 Fall 2009 4 / 8

Asia

“Too many people on too little land” Early introduction of private property rights due to colonialization , ! absentee landlords and sharecroppers/tenants. Rapid population growth , ! fragmentation of land China , ! major increase in productivity following 1978 land reforms , ! collective ownership vs. the household responsibility system

Huw Lloyd-Ellis () Econ 239 Fall 2009 5 / 8

17

Box 1

Simplified Chronology of Economic Reform in China since 1978

Stage One (1978-1984) – Revitalization Period

The 3rd plenum of the 11th Communist Party of China (CPC) congress central committee in December 1978 adopted an economic reform program that during the 1978-1984 period of time:

• Leased land to farmers under the household responsibility system;
• Lifted procurement prices for key crops;
• Introduced a dual price system for agricultural products;
• Encouraged diversification and specialization of crops;
• Introduced a profit retention system into state-owned enterprises on an

experimental basis; and

• Applied an open-door policy by setting up special economic zones firstly

in Shenzhen, Zhuhai, Shantou and Xiamen (later expanded to 14 cities).

Stage Four (1992-1997) – Reform deepening period

The 14th CPC congress central committee made clear that the basic objective of Chinese economic reform was the establishment of a social market economy.

• Experimental share-holding system was carried out in state enterprises.
• Introduction of a modern enterprise system.
• “8-7 plan” was launched (1994) as a poverty reduction plan that aimed to

eliminate the 80 million rural poor within seven years in 592 poverty-stricken counties and raise per capita income to 500 yuan per year (in 1990 constant prices).

• The Asian crisis happened in 1997
• The 15th CPC congress central committee encouraged expansion of all kinds
• f non-state-owned enterprises in September 1997.

Stage Two (1984-1988) – Reform Broadening Period

The 3rd plenum of the 12th CPC congress central committee decided to expand economic reform to include urban enterprises in October 1984.

• The “contract responsibility system” was introduced to strengthen the

responsibility and decision-making authority of managers.

• The enterprise tax system replaced the profit retention system.
• A new labour contract system pushed out the life-long labour system.
• The private sector was given formal permission to exist and develop

within the regulated range.

• Severe inflation took place during 1987-1988.

Stage Five (1998- present) – Reform Acceleration period

• Firms were encouraged to lay off redundant workers so as to improve
• efficiency. It was especially applied to state-owned enterprises.
• Became a member of WTO in 2001.
• A basic social security system was set up, consisting mainly of social

insurance (old age pension, medical care insurance, unemployment insurance, working injury insurance and childbirth insurance), social relief (minimum living allowance), social welfare and special social care for disabled people.

Stage Three (1989-1991) – Retrenchment period

• Aimed at combating inflation

Note: see Appendix 3 for a detailed discussion of these economic reforms in the context of the development of a social security system in China.

• Chart 1-1: Agricultural Labour Productivity, 1978-2000

200 400 600 800 1000 1200 1 9 7 8 1 9 8 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 Labour Productivity (yuan/worker, 1978 prices)

Source: Table 1-4

Chart2-1: Trend in Rural Poverty, 1978-2001

5 10 15 20 25 30 35 1 9 7 8 1 9 8 4 1 9 8 5 1 9 8 6 1 9 8 7 1 9 8 8 1 9 8 9 1 9 9 1 9 9 2 1 9 9 4 1 9 9 5 1 9 9 7 1 9 9 8 1 9 9 9 2 year poverty incident(%)

Source: Table 2-3

Africa

Still mainly subsistence farming , ! exceptions in some former colonial settlements Traditional methods/institutions still dominate , ! some shifting cultivation , ! traditional technologies , ! seasonal employment , ! communal land rights Rapid population growth and increasing commercialization , ! increasing pressure on traditional methods (esp. in Kenya, Nigeria, Ghana, Uganda) , ! soil erosion and deforestation of marginal lands ) need new methods

Huw Lloyd-Ellis () Econ 239 Fall 2009 6 / 8

Evolution of the Mode of Agricultural Production

Subsistence farming — risk and uncertainty , ! reluctance to adopt new technologies , ! ine¢cient contractual arrangements (e.g. sharecropping) Mixed and diversi…ed farming — cash crops , ! commercialization due to urban growth and trade , ! supportive institutional framework is crucial Modern commercial farming

Huw Lloyd-Ellis () Econ 239 Fall 2009 7 / 8

Rural Development Policy (since 1980s)

Policies to accelerate technology adoption and innovation , ! scale neutrality (e.g. green revolution) Policies to improve institutional structure , ! increased access to credit, research, irrigation services, etc. , ! crop insurance Improved agricultural pricing policies Land reform Extension of public services to rural areas

Huw Lloyd-Ellis () Econ 239 Fall 2009 8 / 8