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 3.5 1961–1975 3.0 1976–1990 2.5 1991–2005 2.0 Whole period 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 East Asia Latin America Near East and South Asia Sub-Saharan and the Pacific and the North Africa Caribbean Africa Note: Agricultural value added includes fish and forestry products. No data are available Source: World Bank, 2006. 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.

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 -5 -4 -3 -2 -1 0 1 2 3 4 Percentage Source: FAO, 2006h.

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 Stage Four (1992-1997) – Reform deepening period The 3 rd plenum of the 11 th Communist Party of China (CPC) congress central The 14 th CPC congress central committee made clear that the basic objective of committee in December 1978 adopted an economic reform program that during Chinese economic reform was the establishment of a social market economy. • the 1978-1984 period of time: Experimental share-holding system was carried out in state enterprises. • • Leased land to farmers under the household responsibility system; Introduction of a modern enterprise system. • • Lifted procurement prices for key crops; “8-7 plan” was launched (1994) as a poverty reduction plan that aimed to • Introduced a dual price system for agricultural products; eliminate the 80 million rural poor within seven years in 592 poverty-stricken • Encouraged diversification and specialization of crops; counties and raise per capita income to 500 yuan per year (in 1990 constant • prices). Introduced a profit retention system into state-owned enterprises on an • The Asian crisis happened in 1997 experimental basis; and • • The 15 th CPC congress central committee encouraged expansion of all kinds Applied an open-door policy by setting up special economic zones firstly of non-state-owned enterprises in September 1997. in Shenzhen, Zhuhai, Shantou and Xiamen (later expanded to 14 cities). Stage Two (1984-1988) – Reform Broadening Period Stage Five (1998- present) – Reform Acceleration period The 3 rd plenum of the 12 th CPC congress central committee decided to expand • Firms were encouraged to lay off redundant workers so as to improve economic reform to include urban enterprises in October 1984. efficiency. It was especially applied to state-owned enterprises. • • The “contract responsibility system” was introduced to strengthen the Became a member of WTO in 2001. • responsibility and decision-making authority of managers. A basic social security system was set up, consisting mainly of social • The enterprise tax system replaced the profit retention system. insurance (old age pension, medical care insurance, unemployment • A new labour contract system pushed out the life-long labour system. insurance, working injury insurance and childbirth insurance), social relief • (minimum living allowance), social welfare and special social care for The private sector was given formal permission to exist and develop disabled people. within the regulated range. • Severe inflation took place during 1987-1988. Stage Three (1989-1991) – Retrenchment period Note: see Appendix 3 for a detailed discussion of these economic reforms in • Aimed at combating inflation the context of the development of a social security system in China.

• Chart 1-1: Agricultural Labour Productivity, 1978-2000 1200 (yuan/worker, 1978 prices) 1000 Labour Productivity 800 600 400 200 0 8 0 2 4 6 8 0 2 4 6 8 0 7 8 8 8 8 8 9 9 9 9 9 0 9 9 9 9 9 9 9 9 9 9 9 0 1 1 1 1 1 1 1 1 1 1 1 2 Source: Table 1-4

Chart2-1: Trend in Rural Poverty, 1978-2001 35 poverty incident(%) 30 25 20 15 10 5 0 8 4 5 6 7 8 9 0 2 4 5 7 8 9 0 7 8 8 8 8 8 8 9 9 9 9 9 9 9 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 year 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