Development Economics SOCSC13
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What does the traditional two-factor neoclassical theory of production primarily emphasize?

  • The impact of capital on production efficiency.
  • The variability of both land and labor inputs.
  • The importance of technological advancements in agriculture.
  • The maximization of profit with fixed land and variable labor. (correct)

    • Which factor is crucial to the standard theory of income maximization in farming?

  • Availability of advanced machinery.
  • Perfect knowledge of technological input-output relationships. (correct)
  • Diverse crop rotation strategies.
  • Access to government subsidies.

    • What explains the low productivity observed in traditional agriculture according to the neoclassical theory?

  • Lack of investment in land improvements.
  • Resistance to adopting modern farming techniques.
  • The law of diminishing marginal productivity. (correct)
  • Inadequate labor force participation.

    • Why might small-scale farmers resist technological innovation?

    <p>Disruption of traditional farming practices.</p> Signup and view all the answers

    What is a potential limitation of the traditional neoclassical theory regarding farmers' behaviors?

    <p>It overlooks social institutions affecting farmers' decisions.</p> Signup and view all the answers

    What characterizes the first stage of agricultural production?

    <p>Pure, low-productivity, subsistence-level farming.</p> Signup and view all the answers

    In which stage of agricultural production is the farm primarily oriented towards the commercial market?

    <p>The third stage.</p> Signup and view all the answers

    What is a critical requirement for transforming traditional agriculture?

    <p>Profound changes to social and political structures.</p> Signup and view all the answers

    What is likely to happen without the necessary changes to agricultural development?

    <p>Widening wealth gaps between landholders and workers.</p> Signup and view all the answers

    Which term best describes the second stage of agricultural production?

    <p>Mixed family agriculture.</p> Signup and view all the answers

    What is typically NOT a characteristic of subsistence farming?

    <p>High engagement in commercial markets.</p> Signup and view all the answers

    What is an implication of transitioning from subsistence to diversified agriculture?

    <p>Increased production geared towards market demands.</p> Signup and view all the answers

    What aspect is NOT considered when discussing the agriculture transition?

    <p>Cultural preservation.</p> Signup and view all the answers

    What is the primary focus of rural development as described?

    <p>Small-farmer agricultural progress</p> Signup and view all the answers

    Which objective includes efforts to raise income through rural industrialization?

    <p>Job creation and social services</p> Signup and view all the answers

    What contributes to limiting farmland expansion as part of rural development?

    <p>Environmental sustainability</p> Signup and view all the answers

    Why is decreasing inequality in rural income significant for development?

    <p>It facilitates broader economic participation.</p> Signup and view all the answers

    What is a necessary condition for the ongoing improvement of rural development?

    <p>Sustaining the rural sector's capacity</p> Signup and view all the answers

    What is the primary purpose of output produced on a traditional subsistence farm?

    <p>To support family consumption</p> Signup and view all the answers

    Which factor is not essential for production on a subsistence farm?

    <p>Capital investment</p> Signup and view all the answers

    Which of the following is a common staple food in subsistence farming?

    <p>Cassava</p> Signup and view all the answers

    What is often a significant barrier to peasant farmers continuing their livelihood?

    <p>Failure of the rains</p> Signup and view all the answers

    How does the law of diminishing returns affect traditional farming?

    <p>Decreases the per-unit yield as more labor is applied</p> Signup and view all the answers

    What misconception do some outsiders have regarding peasant resistance to change?

    <p>It indicates incompetence or irrational behavior</p> Signup and view all the answers

    Which of the following best describes labor use in traditional subsistence farming?

    <p>Labor is underemployed but fully occupied during planting and harvest</p> Signup and view all the answers

    In which regions is subsistence farming still prevalent?

    <p>Mostly in sub-Saharan Africa and some areas in Asia and Latin America</p> Signup and view all the answers

    What is the primary motivation for peasant farmers in high-risk agricultural environments?

    <p>Maximization of the family’s chances of survival</p> Signup and view all the answers

    Why do traditional farmers exhibit risk-averse behavior regarding input usage?

    <p>They face price uncertainty and access to credit limitations.</p> Signup and view all the answers

    What is a likely preference for traditional farmers regarding agricultural technology?

    <p>Low-yield technology with low variance</p> Signup and view all the answers

    What has contributed to the failure of programs aimed at increasing agricultural productivity among small farmers?

    <p>Lack of adequate insurance against crop risks</p> Signup and view all the answers

    In subsistence agriculture, what are small farmers often exposed to during poor years?

    <p>The danger of starvation</p> Signup and view all the answers

    What can cause misinterpretations of subsistence farmers in historical contexts?

    <p>Misunderstanding of risk and uncertainty in agriculture</p> Signup and view all the answers

    Why might peasant farmers be reluctant to adopt new crop technologies?

    <p>They fear the risk of crop failure.</p> Signup and view all the answers

    What does low mean per-hectare yield with low variance provide to traditional farmers?

    <p>Stability in production despite poor conditions</p> Signup and view all the answers

    What diminishes the validity of traditional economic theories in the context of subsistence agriculture?

    <p>Imperfect information and high transaction costs</p> Signup and view all the answers

    Which aspect significantly increases the risks faced by subsistence farmers?

    <p>Variable rainfall patterns</p> Signup and view all the answers

    What is a primary reason why peasants refrain from fully investing in their land?

    <p>They are concerned about the risk of eviction or expropriation.</p> Signup and view all the answers

    In what way does sharecropping potentially lead to inefficiency?

    <p>Farmers are only compensated for a fraction of their output.</p> Signup and view all the answers

    What is the main idea behind the monitoring approach proposed by Steven Cheung?

    <p>Profit-maximizing landlords will ensure tenant productivity through oversight.</p> Signup and view all the answers

    What would be a likely consequence of implementing poorly designed tenure reform?

    <p>Greater risk for smallholders and potential further impoverishment.</p> Signup and view all the answers

    How might mechanization be counterproductive in rural areas of developing countries?

    <p>It can increase unemployment among rural laborers.</p> Signup and view all the answers

    Which statement best illustrates the concept of interlocking factor markets?

    <p>Landlords monopolize control over resources crucial for farming.</p> Signup and view all the answers

    What is one of the major challenges faced by developing countries in increasing agricultural productivity?

    <p>Widespread environmental degradation.</p> Signup and view all the answers

    Why might green revolution technologies fail to benefit small farmers?

    <p>Small farmers lack access to needed complementary inputs.</p> Signup and view all the answers

    What is a potential benefit of collective action among smallholders?

    <p>It allows for better bargaining power in markets.</p> Signup and view all the answers

    What can be inferred about the effect of agricultural extensification in developing countries?

    <p>It may worsen local soil degradation.</p> Signup and view all the answers

    Which factor is critical for making sharecropping more efficient?

    <p>Ensuring security of tenure for tenants.</p> Signup and view all the answers

    How does climate change affect smaller farmers in developing regions?

    <p>It is expected to have a more severe impact due to lower access to inputs.</p> Signup and view all the answers

    What does extensive land ownership consolidation often lead to?

    <p>Reduced access to farm input for smallholders.</p> Signup and view all the answers

    Which reform can enhance the efficiency of small-scale agriculture?

    <p>Providing better access to credit and extension services.</p> Signup and view all the answers

    Study Notes

    Development Economics

    • Development economics is a field of study focusing on economic growth and development in various countries
    • Presented by R. Lance Chua, MA, in a PowerPoint presentation (PPT5) related to SOCSC13

    Agricultural Transformation and Rural Development

    • This section focuses on the changes in agriculture and rural areas
    • The presentation examines the shift from subsistence farming to more diversified and commercial agriculture

    The Microeconomics of Farmer Behavior and Agricultural Development

    • Agricultural production development involves three stages
      • Stage 1: Traditional, low-productivity, subsistence-level farming, common in Africa.
      • Stage 2: Mixed family agriculture. Significant portion of product is sold to the market, common in parts of Asia.
      • Stage 3: Modern, highly productive, specialized farming for the market prevalent in developed countries and urbanized developing countries.
    • Agricultural modernization involves:
      • Adapting the farm structure to meet increased production demand
      • Profound changes in the social, political, and institutional structure of rural societies

    Subsistence Farming: Risk Aversion, Uncertainty, and Survival

    • In subsistence farming, most output is for family consumption and staple foods are the main source of nutrition.
      • Example staples: cassava, wheat, barley, sorghum, rice, potatoes, or corn
    • Subsistence farming is characterized by:
      • Low output and productivity
      • Simple methods and basic tools
      • Minimal capital investment with land and labor as primary factors
      • Diminishing returns from increased labor applied to shrinking or shifting land parcels
    • Common difficulties for subsistence farmers:
      • Rain failures
      • Land appropriation by lenders
      • Moneylender involvement

    The Economics of Share Cropping and Interlocking Factor Markets

    • Share cropping is widespread in several regions and countries. Landowners often employ sharecropping as a way of exchanging land for a portion of the crop.
    • A landowner might receive a portion of the yearly crop produced by a peasant farmer
    • The relationship between landlords and farmers can impact the efficiency of farming
    • The sharing system can be inefficient owing to incentives
    • Landlords might not have incentive, as some models illustrate, for farmers to put more effort, as they won't receive full compensation for higher yield
    • Challenges to sharecropping often come from land ownership discrepancies.
    • A model by Steven Cheung challenges that the efficiency loss might be compensated by monitoring, and that failure to meet the bargain could lead to replacement with a harder working farmer
    • A screening hypothesis suggests landlords might choose to offer sharecropping contracts to less competent farmers as they would not want to give up on all profits to more qualified farmers

    Improving Small-Scale Agriculture

    • Modern agricultural innovations may improve productivity and output in developing countries
    • However, in parts of Africa and other areas, much of the improvement has come from extending cultivation into previously unused land
    • Two major sources of technological innovation in farming yields:
      • Mechanized equipment that replaces traditional labor
      • Bio-technological innovations. Land-augmenting variables can increase output by improving land quality, for example new hybrid seeds or irrigation system implementation.
    • Technological innovations can lead to a widening gap between skilled and unskilled farmers, creating unemployment
    • Environmental concerns can arise from new technologies, especially in agricultural expansion

    Institutional and Pricing Policies: Economic Incentives

    • Policies to sustain and improve agricultural advancement can be critical, especially for smaller farmers as they may have limited access to inputs, resources and other vital resources
    • Government policies can be made to serve the interests of wealthier farmers, with poor farmers in developing countries facing low prices for their products
    • Government price policies can significantly impact small farmers

    Adapting to New Opportunities and New Constraints

    • Rural opportunities include activities such as fruits, vegetables, and cut flowers cultivation and aquaculture
    • There is now a chance for additional exports, and organizations can benefit small farmers greatly if they are well organized

    Land Grabbing

    • Foreign investment in developing country farmland is increasing, raising the possibility of farmers losing traditional usage rights of land
    • Negative outcomes can result, including job losses, environmental risks and increasing inequality
    • Several factors can create issues in the farming sector for landowners and tenants, who can lose land through debt or other issues
    • Governments need to take into consideration the concerns and challenges of both wealthy and impoverished farmers in agricultural reform

    Conditions for Rural Development

    • Rural reform involves a broader strategy than only improving agricultural production
    • Rural development depends on factors such as equitable opportunities for all farmer groups, increased production, a reduction in inequality, and increased investment and support for the rural sector
    • Support to farmers should be well-considered and implemented for wider benefits

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    Description

    This quiz covers key concepts in development economics, including agricultural transformation and rural development. It explores the stages of agricultural production and the behaviors of farmers in different regions. Test your understanding of these critical economic principles and their application in various contexts.

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