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Development economics > 7. Agriculture and development > Flashcards

7. Agriculture and development Flashcards

1
Q

Why is agriculture important to development?

A

Agriculture is a very large sector in most poor countries
- and usually accounts for a large share of GDP
- it also employs a systematically larger share of the population
- implication of this agriculture is a low productivity sector

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2
Q

What key outputs does agriculture produce?

A
  • food
  • Cash crops
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3
Q

Why may cash crops be useful?

A

They could be useful to get foreign currency

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4
Q

Where is poverty, usually more prevalent?

A

In rural areas, where agriculture, dominates, employment, production and income

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5
Q

What is the relationship between poverty, location and employment?

A

Poverty is highly correlated with both rural location and employment in agriculture

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6
Q

What percentage of the land in Latin America is owned by the one percent of owners?

A

Around 1 percent of owners, hold 72% of the land

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7
Q

How is land characterised in Asia?

A

Land is heavily fragmented due to land scarcity and population pressure

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8
Q

How is land characterised in Africa?

A

There is the persistence of communal land tenure and subsistence agriculture

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9
Q

Why might agriculture develop differently in different countries?

A
  • Labour productivity e.g. technological adoption
  • Land productivity, e.g. geography climate
  • land ownership
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10
Q

What gender differences do we see in agriculture?

A

Women typically cover subsistence crops and the men on cash crops. This has a huge impact on cultural dynamics.

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11
Q

Give a statistic that demonstrates the difference in productivity and agriculture between a poorest and richest countries

A

The richest countries produce at least twice as much grown per hector as the poorest in spite of far lower labour input per hector of land, in rich countries

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12
Q

How is the agricultural productivity gap (APG) measured?

A

It is based on the value added per worker where value added means the contribution of a particular sector to a country’s GDP

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13
Q

If the agricultural sector were as productive as the other sector in the economy, what would the APG be?

A

The APG should be close to one. This is a useful benchmark.

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14
Q

What is the typical APG of a typical developing country?

A

A typical developing country has a APG of 4 some have 8 or more

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15
Q

What does a high APG mean?

A

That per worker contributions to GDP in agriculture are very low relative to per worker contribution to GDP in non-agricultural sectors

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16
Q

Why is agriculture relatively/absolutely so unproductive in poor countries?

A
  • Technology (underuse of new technologies)
  • institutions (especially with respect to land tenure)
  • Infrastructure/remoteness (infrastructure)
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17
Q

what are some examples of technologies that would improve productivity in agriculture?

A

Fertiliser, improved irrigation, better systems of doing things

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18
Q

Why do farmers and developing countries seem to systematically underuse, new and effective technologies?

A

Technologies are profitable, but constraints to adoption prevent uptake

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19
Q

What are some of the constraints that are the reason that technology is not adopted in some of these countries?

A
  • Credit
  • risk/insurance
  • lack of information (cheap option)
  • lack of skills/training
  • behavioural factors (time inconsistent preferences)
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20
Q

Which developing region of the world has seen the most uptake of technology in agriculture?

A

Generally higher adoption in south and east Asia

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21
Q

Which developing region of the world has seen the lowest uptake of technology in agriculture?

A

Low adoption in sub Saharan Africa

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22
Q

is the technology is available why is take up sometimes low?

A

It isn’t just about cost, even when technology is highly subsidised take up is still low this is because the downside risk is very high if the technology fails

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23
Q

How can adoption be increased for technologies in agriculture?

A

When they are sufficient incentives to invest, namely, by lowering risk, poor farmers are not more irrational than rich farmers. They’re just facing different constraints.

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24
Q

Why can weak institutions harm agriculture?

A

Weak institutions can, and do lead to low productivity in agriculture in particular poor institutions relating to land rights and tenancy, including
- Limited or non-existent private ownership of land
- Varying degrees of tenure security
- Weak markets for land rental and sale

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25
Q

Why can poorly defined property rights lead to many problems?

A
  • lack of incentives for investment in land
  • failure of land, sale, and rental markets
  • impact on credit markets, (poor tenure security impedes collateralisation)
26
Q

What is sharecropping?

A

Sharecropping is an arrangement whereby a landowner permits a farmer to cultivate their land in return for a percentage share of the crop produced

27
Q

Where is sharecropping most frequently practised?

A

India, Pakistan and Bangladesh

28
Q

Why is Sharecropping considered to be intrinsically inefficient?

A

Due to lower incentives for the format to invest in the land compared to land that is owned if a farmer does not receive the full value of the labour input on the land, the time they will dedicate to the land is likely to be lower than it would be otherwise

29
Q

Name a paper that demonstrates that sharecropped land was less productive than owned land?

A

Shaban (1987) India

30
Q

Why is sharecropping way of managing risk for the landowner?

A

Sharecropping is less risky than hiring labour as the share cropper has an incentive to work hard on the land they share in the output

31
Q

Why is sharecropping way of managing risk for the farmer?

A

Sharecropping is less risky than renting land as the cost is proportional to the amount harvested this provides insurance against a bad harvest

32
Q

How can remoteness pose an issue for the productivity agriculture?

A
  • Substantial fractions of African populations live in low density areas.
  • This remoteness remark is systematically correlated with agricultural productivity pouring for structure, implies.
  • Inputs that must be transported become more expensive
  • Farming is less intensive and more likely to be subsistence orientated
33
Q

What are some of the governments key roles in facilitating agricultural development?

A
  • supporting agricultural research and agricultural extension services
  • strengthening policy on landform and tenure
  • providing needed infrastructure
  • intervening in missing markets
  • addressing monopoly on monopoly power
  • reducing environmental externalities
34
Q

What is one of the most widespread types of government intervention aimed at boosting agricultural productivity?

A

An agricultural extension programme

35
Q

What is an agricultural extension program?

A

It involves demonstration and training services for improving agricultural practices and increasing farm productivity, removing the informational problem. They are low, cost easy way of improving general knowledge and community to make them more productive.

36
Q

What is an example of an agricultural extension program?

A

Farmer field approach, originating in 1980s, Indonesia to provide participatory learning by doing

37
Q

What has the impact of agricultural extension programs?

A

The services are credited with positive effect on productivity, notably three producing high yielding, crop varieties. In many countries.

38
Q

Give a statistic that shows how Sub-saharan African farmers are relatively poor?

A

More than 60 percent of the population of sub-Saharan Africa is smallholder farmers, and about 23 percent of sub-Saharan Africa’s GDP comes from agriculture.

39
Q

What types of technology do subsistence farmers prefer and why may this be harmful to development?

A

Subsistence farmers often prefer technologies that combine low mean per hectare with low variance to alternative high yielding but higher risk technologies.

40
Q

How could productivity and investment be maximised?

A

It requires farmers to own the land they farm

41
Q

What did Shaban (1987) find?

A

Differences in inputs and outputs on owned versus sharecropped land were sizeable in India even when both were owned by the same household

42
Q

What is the typical share that a landlord charges for sharecropping?

A

Anywhere from less than 1/3 to more than 2/3 depending on local labour availability and other inputs the landlord provides

43
Q

How are sharecropper farmers paid ?

A

Alfred Marshall observed that the farmer was, in effect, paid only part, rather than all, of his marginal product and would rationally reduce work effort accordingly.

44
Q

Explain how you would set up a graph to show the inefficiencies of sharecropping

A

The Value per unit of labour on the y-axis, amount of labour effort on the x-axis. A farmer who owned his own farm would work until his value marginal product of labour (VMPL) was equal to his alternative wage, or opportunity cost of labour, wA and so would put in an efficient amount of labour effort, LF.

45
Q

What did Steven Cheung argue?

A

Profit-maximising landlords would establish contracts requiring adequate work effort from the tenant as well as stipulating each party’s share of the output. If effort was not too difficult to monitor, then if one tenant failed to live up to his part of the bargain, he would be replaced by another tenant who was willing to work harder; as a result, sharecropping would be as efficient as any other contractual form.

46
Q

What is the value per unit of labour theory of sharecropping known as?

A

The Marshallian approach

47
Q

What is Cheungs theory known as?

A

The monitoring approach

48
Q

Why do rural landlords have such abundant monopoly and monopsony power?

A

Interlocking factor markets: The economic and social framework in which sharecropping takes place is one of extraordinary social inequality and far-reaching market failure. When the peasant faces his landlord, he often faces not only the individual whom he must persuade to rent him productive land but at the same time his prospective employer, his loan officer, and even his ultimate customer for any crops he wishes to sell

49
Q

How can welfare of tenants be improved under interlocked markets of a dominant landlord?

A

A study of interlinkage involving a dominant landlord often concludes that nothing short of land reform will reliably affect the tenant’s welfare.

50
Q

What is the most important factor for improving small-scale agriculture?

A

Technological innovation

51
Q

Why is technological innovation the most needed factor?

A

In many parts of Africa, however, increased output in earlier years was achieved without the need for new technology simply by extending cultivation into unused but potentially productive lands. Almost all of these opportunities have by now been exploited, and there is little scope for further significant or sustainable expansion.

52
Q

What could be two technological innovations that could improve farm yields?

A
  • Introduction of mechanised agriculture to replace human labour
  • Biological (hybrid seeds and biotechnology), water control (irrigation), and chemical (fertiliser, pesticides, insecticides, etc.) innovations
53
Q

What are the issues with implementing mechanised agriculture?

A

In the rural areas of many developing nations, where land parcels are small, capital is scarce, and labour is abundant, the introduction of heavily mechanised techniques is often ill suited to the physical environment and has the effect of creating more rural unemployment without necessarily lowering per-unit costs of food production

54
Q

What are the three conditions needed for rural development?

A
  • Land reform
  • Supportive policies
  • Integrated development objectives
55
Q

How does land reform work?

A

Land reform usually entails a redistribution of the rights of ownership or use of land away from large landowners in favour of cultivators with very limited or no landholdings. It can take many forms: the transfer of ownership to tenants who already work the land to create family farms (Japan, South Korea, Taiwan)

56
Q

Who supports the notion of land reform?

A

The Economic Commission for Latin America (ECLA) has repeatedly identified land reform as a necessary precondition for poverty-reducing agricultural and rural progress. A Food and Agriculture Organisation (FAO) report concluded that in many developing regions, land reform remains a prerequisite for development

57
Q

What are the difficulties with land reform?

A

-Very small or landless farmers cannot directly purchase land from the big landowners because of market failures.
- Credit markets do not function well enough to provide a potentially efficient family farmer with a loan; even if they did, the price of latifundio and other estate and plantation land is too high because land ownership confers many benefits beyond the income from farming activities, such as
-Disproportionate political influence.

58
Q

Why have many proposed land reforms failed?

A

Many land reform efforts have failed because governments (especially those in Latin America) bowed to political pressures from powerful landowning groups and failed to implement the intended reforms

59
Q

What is the general conclusion of land reform?

A

If programmes of land reform can be legislated and effectively implemented by the government, the basis for improved output levels and higher standards of living for rural peasants will be established

60
Q

What else needs to happen for any land reform to be effective?

A

It is likely to be ineffective and perhaps even counterproductive unless there are corresponding changes in rural institutions that control production (e.g., banks, moneylenders, seed and fertiliser distribution

61
Q

What is the conclusion of supportive policies?

A

The full benefits of small-scale agricultural development cannot be realised unless government support systems are created that provide the necessary incentives, economic opportunities, and access to needed credit and inputs to enable small cultivators to expand their output and raise their productivity.

62
Q

What amount of the developing world is located in rural areas?

A

More than half of the population of the developing world is still located in rural areas.

Development economics (17 decks)

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