Intersectoral factor mobility and agricultural growth

The appropriateness of an agricultural development strategy, the intensity with which that strategy is pursued, and the effect it has upon agricultural growth and fulfillment of nutritional and income needs all depend upon the nature of the interdependency and linkages between agricultural and other sectors of an economy. The importance of these links is emphasized by the frequent failure of effective demand for food to accompany increased agricultural production and by the too frequently encountered reticence of official growth-oriented planning agencies and finance ministries to accord high priority to the types of rural expenditures requiring

massive resource allocation. The research program of the International Food Policy Research Institute includes work on several aspects of this linkage problem, among which are analysis of the influences on effective demand for food, the sources of agricultural growth, and descriptions of production and consumption linkages of agriculture to the other sectors of the economy.

Research conducted by Yair Mundlak at IFPRI has led to the development of a model for analyzing the relation between particular aspects of agricultural growth and other sectors of the economy. The model is elegant and illuminating. Applied to Japan in this Research Report, it gives particular emphasis to the role of capital and labor flows among sectors and the effect of these flows upon growth. Yair Mundlak is currently applying the model to Argentine data, and exploratory discussion on using it with Mexican data is under way. As IFPRI's research on growth linkages increases, this model, and modified versions of it, will be useful in quantifying relationships and in diagnosing the potentials for faster, more efficient growth.