Agriculture and Economic Development

Abstract

The evolution of agriculture from the days of the Lewisian two-sector model to today’s context has involved many changes and developments, but the backwardness of the agriculture sector has persisted. Low-income countries have experimented with different policy orientations for agriculture. The modern linkage connecting agriculture to the rest of the economy is best described as a series of innovations in value addition through different types of processing and by linking the supply chains to niche markets. However, the occasional successes in value addition hardly match up to the systemic inefficiencies in low-income agriculture. For instance, there is evidence of countries where more than 34 per cent of the population is undernourished, while agriculture represents 30 per cent of GDP. Agriculture also faces significant environmental and climate challenges. While using 85 per cent of the developing world’s freshwater withdrawals and 40 per cent of land, the sector accounts for up to 30 per cent of greenhouse gas emissions. The solutions to these challenges lie in multiple places: appropriate technologies, informed policy, transparent institutions, and, above all, efficient markets.