Development Economics PDF

Development Economics Development economics is a field of study focusing on economic growth and development in various countries Agricultural Transformation and Rural Development This section focuses on the changes in agriculture and rural areas The presentation examines the...

Development Economics Development economics is a field of study focusing on economic growth and development in various countries 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