Agriculture and economic development

In this book, an attempt has been made to provide an up-to-date and comprehensive account of the interaction between agriculture and the economic development of the less developed countries (LDCs). We give a detailed account of both theory and techniques to help the readers to evaluate policy implications. The plan of the book is as follows:

First, we consider how developed countries (DCs) and LDCs differ in respect to the structure and organisation of agriculture and the behaviour of agricultural producers. Some features of traditional agriculture receive special attention and a few important peculiarities in the behaviour of peasant farmers in LDCs are emphasised. Then some comments are made on such peculiarities of the farming environment and its effects on the behaviour of peasant farmers.

In chapter 3, the role of agriculture in economic development is thoroughly investigated in the light of the Kuznets's analysis. Agriculture provides both food and raw materials to the rest of the economy; a growing agricultural sector provides an enlarged market as it expands aggregate demand; it also provides labour for employ ment in the industrial sector, and agriculture is often a principal source of capital for investment elsewhere in the economy. Exports from the agricultural sector are important to earn foreign exchange which is critical for imports of capital goods and other equipment for rapid industrialisation and economic growth.

In chapter 4, we analyse the concept of agricultural surplus and the theory of economic rent. The interchangeability of product, land and labour surpluses is mentioned, and the pattern of distribution under alternative tenure systems is noted. Alternative systems of land tenure are described and attention given to their role in the agricultural systems of LDCs. Next, in chapter 5, the dual economy models and the role of

'surplus' agricultural labour is evaluated critically, particularly in the light of the works of Lewis, Fei and Ranis, Jorgenson and Kelly, and Williamson and Cheetham. Results of the 'tests' of some of these models are stated to derive policy implications

Chapter 6 is an analysis of the important issue of efficiency in resource use in underdeveloped agriculture. In this context, Schultz's 'poor but efficient' hypothesis is examined. The behaviour of poor farmers in the presence of risk and uncertainty is also analysed. The important relationship between farm size and efficiency is examined in this context to formulate land policies. Next, technical change in underdeveloped agriculture is discussed in detail. Here, we have analysed some characteristics of 'modern' agricultural technology and the impact of their adoption in underdeveloped agriculture The barriers to adoption of new technology is analysed with the distributional consequences of their adoption. We argue that dangers of dualistic development within the agricultural sector of LDCs should be properly emphasised.

Chapter 7 deals with the problem of 'supply response' in LDCs The impact of economic incentives on agricultural production and supply are investigated. Both the theoretical and empirical issues in the analysis of the problem of supply response are thoroughly discussed. In this context, supply response of both annual and perennial crops is mentioned. Finally, the role of agricultural price policy is considered for mobilising 'surplus' from the agricultural sector.

Chapter 8 is an investigation of the important institutional constraints on agricultural development. Here, we turn to land ownership structure and the case for land reform. The problem of capital and finance in underdeveloped agriculture is discussed. The structure of agricultural credit market is analysed at length and the problem of 'high' interest rates in such markets examined in detail. Credit policy recommendations, including loan security and interest rate structure, are formulated in the light of our analysis.