Agriculture and national welfare around the world: causality and international heterogeneity since 1960

Calculations of marginal welfare effects suggest that agricultural development has had important positive effects on national welfare, especially in developing countries. Latin American and Caribbean countries have also benefited from agricultural growth, but non-agricultural production has had marginal welfare effects that are greater in magnitude than those provided by agricultural activities. In contrast, the industrialized, high-income countries experienced marginal welfare gains from non-agricultural activities that are much greater than those derived from agriculture, whose impact is actually negative. These calculations of marginal welfare effects across regions depend on econometric estimates of elasticities linking agricultural and nonagricultural economic activities to four elements in a national welfare function: national GDP per capita, average income of the poorest households within countries, environmental outcomes concerning air and water pollution and deforestation, and macroeconomic volatility. The econometric analyses are motivated by theoretical treatments of key issues. The empirical models are estimated with various econometric techniques that deal with issues of causality and international heterogeneity.Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Labor Policies,Economic Theory&Research,Health Economics&Finance,Economic Theory&Research,Environmental Economics&Policies,Agricultural Knowledge&Information Systems,Achieving Shared Growth,Health Economics&Finance

Deregulating technology transfer in agriculture : reform's impact on turkey in the 1980s

Turkey is one of a handful of developing countries that have liberalized regulation of agricultural inputs and welcome private firms delivering technology and inputs. The authors show that Turkish regulatory reform affecting seeds and other inputs in the 1980s: 1) Greatly increased private technology transfer into Turkey. 2) Encouraged market entry for more foreign and domestic companies involved in production and trade in Turkey. 3) Allowed private firms to increase their share of input markets. 4) Where inputs brought new technology, allowed farmers to significantly increase yields and production. The authors recommend that the World Bank and other donors involved with agriculture pay more attention to the regulation of inputs in developing countries. They also recommend that developing country governments revise regulations to leave choices about technology performance to farmers and markets - and to focus instead on externalities, removing unnecessary obstacles to provide technology transfer through the production and trade of inputs. Other countries that have similarly reformed the regulation of agricultural inputs include Chile (in the 1970s), Bangladesh and India (at the end of the 1980s), Malawi (in 1995-96), and Romania (in 1997).Knowledge Economy,Agricultural Research,Environmental Economics&Policies,Crops&Crop Management Systems,Agricultural Knowledge&Information Systems,Economic Theory&Research,Crops&Crop Management Systems,Agricultural Research,Environmental Economics&Policies,Agricultural Knowledge&Information Systems

Oil, agriculture, and the public sector: linking intersector dynamics in Ecuador

In a recent paper, Fiess and Verner (2000) analyse sectoral growth in Ecuador and find significant long-run and short-run relationships between the agricultural, industrial and service sectors. They take this as evidence against the dual economy model which rules out a long-run relationship between agricultural and industrial output and show further that a more detailed picture of the growth process can be discovered, once the agricultural, industrial and service sectors are disaggregated further into intrasector components. This paper extends their initial results and provides insight from a multivariate cointegration analysis of intrasector components. The authors are able to identify three cointegrating relationships, each of which has its own meaningful economic interpretation: Two cointegration relationships capture the direct and indirect effects of the"petrolization"of the Ecuadorian economy. A third relationship clearly indicates a link between agriculture and industrial activity. Since this third cointegrating relationship seems to coincide in time with the trade liberalisation at the end of the 1980s, promoting agriculture appears to be an important way to promote sustainable economic growth in Ecuador.Economic Theory&Research,Environmental Economics&Policies,Scientific Research&Science Parks,Statistical&Mathematical Sciences,Agricultural Knowledge&Information Systems,Statistical&Mathematical Sciences,Economic Theory&Research,Environmental Economics&Policies,Agricultural Knowledge&Information Systems,Achieving Shared Growth

Implications of genetically modified food technology policies for Sub-Saharan Africa

The first generation of genetically modified (GM) crop varieties sought to increase farmer profitability through cost reductions or higher yields. The next generation of GM food research is focusing also on breeding for attributes of interest to consumers, beginning with"golden rice,"which has been genetically engineered to contain a higher level of vitamin A and thereby boost the health of unskilled laborers in developing countries. The authors analyze empirically the potential economic effects of adopting both types of innovation in Sub-Saharan Africa (SSA). They do so using the global economy-wide computable general equilibrium model known as GTAP. The results suggest that the welfare gains are potentially very large, especially from nutritionally enhanced GM wheat and rice, and that-contrary to the claims of numerous interests-those estimated benefits are diminished only slightly by the presence of the European Union's current barriers to imports of GM foods. In particular, if SSA countries impose bans on GM crop imports in an attempt to maintain access to EU markets for non-GM products, the loss to domestic consumers due to that protectionism boost to SSA farmers is far more than the small economic gain for these farmers from greater market access to the EU.Economic Theory&Research,Crops&Crop Management Systems,Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Agricultural Research,Crops&Crop Management Systems,Environmental Economics&Policies,Agricultural Research,Economic Theory&Research,Agricultural Knowledge&Information Systems

The significance of credits and subsidies in Russian agricultural reform

The author analyzes the role of federal agricultural credits and subsidies in Russia since the Gaidar reforms of January 1992. Pressure on the budget has led to a significant reduction in federal transfers to the agro-industrial complex. Transfers fell from 10 percent of gross domestic product (GDP) in 1992 to 3 percent of GDP in 1993, and budget transfers for 1994 are only about 2 percent of GDP. But the nature of federal transfers to the agro-industrial complex has not changed significantly since 1992, and federal transfers have tended to impede market-oriented reform rather than enhance it. So, reform in the agriculture sector has been driven largely by a budget squeeze on the implementation of policies that hinder the development of market-oriented agriculture. The author provides an overview of federal agro-industrial programs, describing four types of support in detail: 1) credits and subsidies to promote private farms; 2) credits associated with state procurement of agricultural products; 3) subsidies for agricultural inputs; and 4) general subsidies to agricultural producers. He shows the difficulty of using federal transfers to support agriculture when institutions are unstable, the government's administrative and regulatory capabilities are weak, and information needed for effective credit allocation is unavailable. The author also shows the extent to which the framework for agricultural policy has not changed since the Soviet era.Banks&Banking Reform,Environmental Economics&Policies,Payment Systems&Infrastructure,Economic Theory&Research,Crops&Crop Management Systems,Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Agricultural Knowledge&Information Systems,Crops&Crop Management Systems

Intersectoral resource allocation and its impact on economic development in the Philippines

For sustained growth, a developing economy must provide productive employment opportunities in nonagricultural sectors. As the economy grows, employment shifts from the agricultural sector to industrial and service sectors. The move away from agriculture happens because of the decline in the income elasticity of food as incomes rise, the discovery of substitutes for agricultural products, and rapid technological changes in agriculture in response to shortages of land. The economic policies developing economies pursue are typically designed to accelerate this structural transformation by favoring the industrial sector. In the Philippines, however, the outcome of these policies was unique. Measures designed to discourage agriculture, rather than encourage the industrial sector, caused both the industrial sector and the agricultural sector to deteriorate. The authors criticize financial conglomerates for creating highly oligopolistic market structures that were responsible for the inefficient use of resources and unbalanced income distribution. Many of the conglomerates (dubbed"landed capitalists") channeled massive state resources into such traditional economic activities as sugar and coconut farming, limiting the country's industrial diversification.Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Fiscal&Monetary Policy,Agricultural Knowledge&Information Systems,Economic Theory&Research,Banks&Banking Reform,Agricultural Knowledge&Information Systems,Municipal Financial Management,Environmental Economics&Policies

Why liberalization alone has not improved agricultural productivity in Zambia : the role of asset ownership and working capital constraints

The authors use a large panel data set from Zambia to examine factors that could explain the relatively lackluster performance of the country's agricultural sector after liberalization. Zambia's liberalization significantly opened the economy but failed to alter the structure of productionor help realize efficiency gains. They reach two main conclusions. First, not owning productive assets (in Zambia, draft animals and implements) limits improvements in agricultural productivity and household welfare. Owning oxen increases income directly, allows farmers to till their fields efficiently when rain is delayed, increases the area cultivated, and improves access to credit and fertilizer markets. Second, the authors reject the hypothesis that the application of fertilizer is unprofitable because of high input prices. Rather, fertilizer use appears to have declined because of constraints on supplies, which government intervention exacerbated instead of alleviating. (Extending the use of fertilizer to the many producers not currently using it would be profitable, but increasing the amount applied by the few producers who now have access to it would not be.) Policies to foster accumulation of the assets needed for agricultural production (including draft animals and implements) and to provide complementary public goods (education, credit, and good agricultural extension services) could greatly help reduce poverty and improve productivity.Economic Theory&Research,Environmental Economics&Policies,Labor Policies,Banks&Banking Reform,Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Agricultural Knowledge&Information Systems,Agricultural Research

Redefining government's role in agriculture in the nineties

The authors argue that government policies in agriculture have been costly and misdirected worldwide. For them, this inefficiency need not continue. The Urugauy Round is an ideal opportunity for developed and developing nations to strike a bargain. They suggest 1) making agricultural trade subject to the full discipline of the GATT by eliminating waivers and exemptions that have set agricultural commodities apart from other products in their treatment under the GATT, 2) bringing developing countries fully into the GATT, by eliminating their special status, 3) getting all countries to reform their agricultural policies, to reduce the many policy-induced distortions that plague the sector. The authors claim that such a bargain would result in a redefinition of governments'role in agriculture, increased sectoral efficiency nationally, and a more smoothly functioning and tightly knit world agricultural trading system.Crops&Crop Management Systems,Environmental Economics&Policies,Agricultural Knowledge&Information Systems,Economic Theory&Research,Agricultural Research

Government's role in Pakistan agriculture : major reforms are needed

Government involvement in Pakistan's agriculture sector has benefited farmers little, contends the author. He recommends reform of agricultural policies and institutions. For one thing, government policy has severely distorted agricultural incentives -- directly, through agricultural pricing policy, and indirectly until recently, through exchange rate policy. Although negative effects of the government's exchange rate policy have been eliminated, the indirect effects from giving certain industries heavier trade protection linger. Input markets have been distorted by subsidies. Those distortions dissipate most of the benefits directed at farmers. The government's role as an institution-builder also needs reform. Public institutions have proliferated in almost every area of agriculture, with little benefit to the sector. The institutions in research and extension are particularly weak. In addition, public enterprises have dominated marketing and distribution -- crowding out private sector efforts -- although the rationale for a government presence there is not clear. Moreover, the underpricing of electricity and water has entailed hidden expenditures that make the continued provision of those essential inputs financially unsustainable. Basic reform is essential, says the author. The proper role of Pakistan's government should be to encourage the development of a smoothly functioning market, through institutional and regulatory reform that facilitates market efficiency and private sector activities. Where market failure is not an issue and government inefficiency is evident, government's role should be drastically reduced. Government spending should focus on public goods and market failures, not on activities better suited to the private sector. However, the government should continue to play an active role in reducing poverty and protecting the environment.Agricultural Research,Environmental Economics&Policies,Economic Theory&Research,Agricultural Knowledge&Information Systems,Water Conservation,Environmental Economics&Policies,Economic Theory&Research,Agricultural Research,Agricultural Knowledge&Information Systems,Banks&Banking Reform

Export commodity production and broad-based rural development: coffee and cocoa in the Dominican Republic

An estimated 80,000-100,000 Dominican farmers produce coffee and cocoa, nearly 40 percent of all agricultural producers. The sectors also provide employment for tens of thousands of field laborers and persons employed in linked economic activities. The majority of coffee and cocoa producers are small-scale and most are located in environmentally sensitive watersheds. Recent trends in international commodity markets have challenged the survival of both sectors. Production is characterized by low yields and uneven quality, while periodic hurricanes have contributed to a lackluster and unstable record of output and exports. Despite these conditions, most experts acknowledge the fact that appropriate agro-ecological conditions exist in Dominican Republic for production of high-quality coffee and cocoa. To be competitive and sustainable, some changes must take place in the coffee and cocoa sectors. The objective of this study is to provide an overview of the coffee and cocoa sectors, to identify major problems, and to suggest possible strategies to deal with these problems. The authors conclude that if the objectives of the government are poverty reduction, environmental protection and overall well-being of rural society, it is critical to move beyond a commodity-specific approach to a broader rural development focus on households, regions and environments where coffee and cocoa are currently being grown.Environmental Economics&Policies,Banks&Banking Reform,Economic Theory&Research,Crops&Crop Management Systems,Agricultural Knowledge&Information Systems,Crops&Crop Management Systems,Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Agricultural Knowledge&Information Systems