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• Lecture 3 covers the state and rural development, examining the social framework of economic development.
• Instructors are Dr. Kojo Opoku Aidoo & Dr Collins Adu-Bempah Brobbey.

Objectives

• Examine the State and its role in development.
• Examine the Relationship between urban and rural areas (Urban-Rural Dichotomy)
• Examine Agricultural policies and its Implications for peasant farmers
• Examine the relationship between the farmers and the state
• Examine the extent to which agricultural policies are influenced by political considerations
• Examine Michael Lipton's theory of "Urban Bias"
• Examine Robert Bates' Theory of Agricultural Markets
• Examine Amanor's argument about "Agribusiness."

Understanding the State (Weber's View)

• The state consists of government organs.
• The state has a monopoly over the exercise of force and power.
• The state is a legitimate institution as perceived by the governed.
• Institutional structures are established to handle governmental tasks.
• Enforcement of policies happens through bureaucracy, government ministries, law enforcement, police, military, tax and revenue, civil society/service, trade unions, etc..
• Administratively, the state performs day-to-day running of state's affairs.
• Legal/ Policies function through legislating, formulating, adjudicating, implementing and evaluating.

Role of the State in Development (Hegel's View)

• Cohesion/Integration: Mediates different interest group.

Role of the State in Development (Marx's View)

• Exploitative Mechanism: The state uses coercive institutions to collect taxes.
• State supports the interests of powerful groups exerting societal influence.
• Military/Security/Defense: Exercises control over citizens and guards against external aggressions.
• The state ensures territorial integrity.

Role of the State in Development (Garner & Gatell's Views)

• Diplomacy: The state deals with international actors and institutions beyond its borders.
• Ideological: Consensus building/conducts elections, population census etc.
• The state has the power over life and death of all citizens.

State Power in Development Discourse

• Legitimate Driven Force: The state applies coercive force to compel obedience.
• Citizens must obey laws due to statutory requirements and severe sanctions for disobedience.
• Powerful Change Agent: The state is recognized as all-powerful with unlimited power.
• The state has supremacy over everything within its borders.
• The state demands obedience to foster national integration for development.
• Authority and Control: The state has authority and control over all human and natural resources.

Lipton's Theory: State Power and Urban Bias

• Developing countries' state organs are dominated by urban elites with economic strength.
• Urban elites organize, centralize, and control the resources within the state.
• In developing countries, urban power is disproportionate to the urban share of population/production.
• Urban elites consist of intellectuals, businessmen/women, politicians, bureaucrats, trade-union leaders, and professionals, who control resource distribution.
• Rural people in contrast are dispersed, poor, inarticulate, not organized, and unable to make demands on the government.
• Large disparity is witnessed between rural and urban areas due to urban power

Lipton's Theory: Urban Bias Stats in Developing Countries

• Around 70% of the population work in rural areas.
• Around 40-45% of GNP is produced in rural areas.
• Only about 20% of national investment is received in rural areas.
• Wealth from the rural sector is extracted for urban development.
• Urban Bias is the result of gaps/inequalities between rich urban and poor rural populations.

Government Policies and Urban Bias

• Agricultural production is undermined because government policies often make commodities very cheap.
• Manufactured commodities often become relatively expensive.
• A disincentive for investment is served due to inefficiencies.
• Urban growth is ensured by investment, but rural communities do not experience much employment.
• Rural labor intensive options are therefore not developed

Rural Inequalities

• Urban areas want surpluses from rural areas with minimal investment.
• Supports are provided to only those people in rural areas who can provide surpluses.
• Surpluses can consist of food, savings, export crops for foreign exchange
• Agricultural policies are focused on benefiting the big farmers.
• Small farmers see most improvement go into consumption if focused on.
• Large farmers transform inputs into more produce for the market.
• Efficiency is stifled, because small farmers occupying significant land areas are deprived of incentives, and they are unable to produce more output, per acre than bigger farmers
• Small farmers get less assistance from the state.

Government Policies Supporting Large Farmers

• Forced industrialization has been based on an alliance between urban elites and large-scale farmers, neglecting the peasant or small farmers.
• The aim of alliance is to extract surplus from agriculture in the form of cheap food, savings and foreign exchange in return for favoured farmers having access to subsidies, inputs and services.
• Inputs are only appropriate for large farmers.
• Small farmers face difficulties buying inputs at inflated prices.

Implications of Government Policies

• The rural poor faces uncompetitive conditions compared to big farmers and urban dwellers.
• Access to land, inputs, social infrastructure is greatly limited.
• Subsidizing large-scale agriculture has led to declining exports, rising food imports and increased national debt.
• Underuse & overuse are often related to scarce labor and costly capital.
• Urban job creation has proven to be an unsustainable strategy

Lipton's Theory: Urban Bias in Africa

• Higher urban bias is seen in Africa than elsewhere, leading to more inefficient agriculture.
• Agricultural productivity is consequently low.
• Europe sees agricultural work produces 75% compared to urban work
• Asia and Latin America agricultural work produces 35% compared to urban work
• Africa's agricultural work produces 20% compared to urban work
• A 6:1 ratio non-farm-farm income gap was seen in the 1980s in africa
• Asia and Latin America saw a 3:1 ratio
• Early European and Japanese development saw a 1.5:1 ratio

Inappropriate Policies & Myths about Agriculture

• Africa's inappropriate agricultural policies have led to myths about peasants' backwardness.
• There is evidence peasants are innovative and rational.
• There is a myth that large farmers are more efficient producers, but yields & return is higher than smaller farms.
• Applying Western capital-intensive methods to land-scarce environments is seen as a myth.
• Developing technologies near urban cities will not yield results without on-farm experimentation.

Why Urban Bias Exists

• Rural areas aren't well organized or able to articulate their demands in a way that forces urban elites to take note.
• Organize rural peoples so exploitation roots from rural-urban division, not rural differences.
• An attempt to manipulate market forces, and to influence the prices of exports and imports, is against farmers and rural workers.
• State resources build up urban rather than rural infrastructures (water, roads) and social services (health, education).
• Small farmers are marginalized in development.

Overcoming Urban Bias

• Rural people can be organised and unite to develop a rural alliance to demand allocation of resources from urban areas.
• Industrialization normally follows economic development.
• Agriculture developed before the rural surplus was transferred (as seen in Europe and Japan)
• Most developing countries prioritize industrialisation, to modernise their economy.
• Development can involve running state run farms to deliver surpluses to the cities.

Corbridge's Criticism of Urban Bias

• Theory equating the rich with urban and poor with rural.
• Many poor people live in urban areas.
• Theory makes big farmers part of the urban structure as a creation of urban bias.
• Theory presupposes that all rural people are poor and urban people are rich; this is a fallacy.
• Small farmers may want higher food prices.
• Cheap food is a benefit to rural labourers
• Large farmers want to protect favoured status.
• No clear association between urban/rural class interests and urban bias is evident.

Bates Theory: Markets and the State

• Bates focused on the connection between the state, political interests, and farmer interests rather than dichotomy between rural and urban interests.
• While Lipton believes that urban bias resulted from a rural-urban divide, Bates suggests it resulted from a relationship between state and political interests on the one hand, and farmers on the other.
• Research was done in the late 1970s-early 1980s.
• Influential in policy changes, pressures in structural adjustment to remove state interventions in agricultural development policies.

What is Agricultural Development Policy

• Agricultural development policy is about providing incentives for farmers to improve their practices.
• Problems in agriculture are linked to improper incentives.
• The market operations become distorted
• Government policy is related to one type of distortion
• Government relies on political interest to shape policies.
• Political interest will appease powerful groups for political regimes.

Bates Theory: Three Agricultural Markets

• Powerful political interests have become entrenched in the state.
• Government intervention harms farmer interests in agricultural markets.
• Three important markets are in the agricultural sector.
  • First, agricultural commodities (food crops, cash crops for export)
  • Second, factors of production (inputs such as fertilizer)
  • Third, consumer goods consumed by rural people (staple food, yam, cassava, rice etc.)
• Governments use interventions to build up their support base

Bates Theory: Agricultural Commodity Markets

• Governments are interested in keeping the farmgate price of commodities low in agricultural commodities markets.
• Control of trades enables them to achieve profits and raise funds.
• Raising funds serves to finance the large bureaucracy and industrial ventures.
• Prevents unrest and create urban allience with the help of cheap food for urban workers and inputs for local industries
• Marketing boars and price controls help impose minimal export levels.
• Farmers produce food crops for local markets, and they increase self provisioning by retreating from the market.

Bates Theory: Markets for Inputs

• The market provides subsidies to the inputs to increase mechanized farming's profitability
• Market encourages large scale production
• Benefits are granted to a few elite farmers who gain profits, input delivery programmes, win allies in rural areas.

Input Markets

• They help maintain political rather than economic efficiency
• Government can maintain and extend power through markets
• This supports state indeustrial sectors and maintains a bureaucracy
• Urban workers are appeased to avoid riots if prices increase

Bates Theory: Consumer Goods

• Governments intervene in the Market for Consumer Goods to influence high prices paid for consumer goods manufactured by local industries by introducing high import tariffs.
• Promotes the interests of the industrial classes
• Industrial classes often Ally with the government
• Insures consumer pay for industrialization
• Local industries aren't concerned with competing on a global level
• Results in inefficiencies consumed by farmers

Bates Theory: State Policies and Prices

• Governments does not encourage better market mechanisms.
• Governments benefit politically from inefficient, invisible markets.
• Politcal interests dictate that the company is a system of patronage.

Unorganized Rural Producers

• Governments could strengthen food production by raising prices, increasing investment.
• Rural workers do not demand higher prices because these efforts are met with unpopular opinion with the public.
• The extension of patronage is supported because government prefers development instead of efficient development.
• Dissenter removed access to resources by giving the resources to loyal supporters
• Inefficiency is caused by poorly trained supporters being rewarded
• Government distorts these policies to receive political support

Bates Theory: Politics vs Development

• A portion what they extract from rural areas,isreturned to few allies.
• The government creates rural disivions so they compete for patronage rather than a united massess.
• Who defines it
• For who does the policy serve

Bates Theory: Economic inefficency

• Developed to promote patronage
• Hostile policies lead to less production
• Rewards individuals for engaging in corrupt practices
• The possibility of lacking means to livelihood deters individuals to speak up.

Implications of Government Interventions

• The small framers a seen more as a problem in agriculture
• Government interventions and policies are the actual underlying cause
• The government only creates groups that prevent them from revolutionary changes

Arnar Theory: Critique Of Bates' Views

• Deregulation opens up African markets not only to commodities but also to Food
• US rice dominate some west African market
• This will undercut local production and displace native foods
• They receive other subsidies as well

Arnar Theory: US Influence

• Traders believe africa should specialize in crop where they have a comparative advantage(export crops)
• Bate does not see that the state promotes international agribusiness which invades development countries.
• They have market dominance in volatile markets

Arnar Theory: African limitations

• Diversifying products comes with issues because of regulation
• Multinational control of theses accessability

Arnar Theory: Ghana

• Control of private marketing
• Yam market in urban areas
• Monopolies in large rural wholesale
• The buyers are in control and the market is restricted.