The Role of Agriculture and Human Capital in Economic Growth: Farmers, Schooling, and Health

Abstract

This survey reviews the existing literature, identifying the contribution of agriculture, schooling, and nutrition to economic growth and development over time and across countries. Particular attention is paid to the roles of improvements in agricultural technology and of the human capital of farmers and farm people. Macroeconomic and microeconomic evidence related to the interactions between human capital, productivity and real income per capita have occurred over the past 250 years. We show that for most countries, development is a process of conversion from primarily agrarian economies to urban industrial and service economies. The evidence is that positive technology shocks to agriculture have played a key role in igniting a transition from traditional to modern agriculture and to long-term economic growth in almost all countries. Improvements in agricultural technologies improve labor productivity and create surplus agricultural labor that can provide workers for the growing urban areas. In some cases, improved nutrition helps raise labor productivity and allows individuals to work for longer hours, which makes human capital investments more attractive. The induced improvements in the skill level of a population have major implications for raising living standards, improving health standards, and altering time allocation decisions. In most currently poor and middle income countries, improved schooling has been more important than improved nutrition or caloric intake in explaining recent economic growth. Nevertheless, the poorest countries of the world continue to have a large share of their labor force in agriculture, and growth cannot occur until they experience their own agricultural transformation.