Nafziger Economic Development (4th ed)

266Part Two. Poverty Alleviation and Income Distribution

examination of the full range of alternatives, including no action, by an informed and democratic public (World Bank 2003i:94–95). Although DCs may be able to afford GM skepticism, LDC needs are critical enough to err on the side of adopting technologies to expand food production.

Conclusion

If we use the World Bank count, more than 3 billion people and 500 million poor people live in rural areas. Rural inequality is probably less than urban inequality in LDCs as a whole, especially in Afro-Asia. Nevertheless, rural populations have a higher percentage in poverty than urban populations, because of much lower average incomes in rural areas. Most rural poverty is concentrated among agricultural laborers, the landless, and the near landless. Households headed by women form a disproportionate share of the rural poor. Two-thirds of sub-Saharan Africa’s rural population (with the highest poverty rate) and more than one-half of Latin America’s rural population live in poverty. Asia has the largest absolute number of rural poor but the lowest rural poverty rate among LDC regions.

Output per person outside agriculture as a multiple of that in agriculture, which is eight in Africa and four in Asia and Latin America, was only about two in Europe in the 19th century.

Because of high levels of capital accumulation, technical knowledge, and worker productivity, agricultural output per worker in developed countries is about 25 times as high as in developing countries.

Subsistence farming dominated LDC agriculture in the past. The major goal of the peasant farmer has been not to maximize income but the family’s probability of survival. Nevertheless, many peasants, attracted by the potential for improving productivity and living standards, have begun to produce more crops for the market. Many others earn a substantial proportion of their incomes from nonfarm activities.

With globalization, a larger proportion of LDC farm ouput is contracted with multinational corporations.

Food production per capita in the developed countries grew 22 percent from 1962 to 1996 compared to 14 percent in developing countries, with sub-Saharan Africa’s average output declining during the same period. Growth rates for both India and China are positive, although generally slower than for LDCs before the late 1970s, and more rapid than other LDCs after liberalization in the late 1970s. Agricultural economists noticed a fall in global average foodgrain production during the late 1980s and early 1990s, but they do not know if foodgrain output per person will grow or decline in the early 21st century.

Entitlement refers to the set of alternative commodities that a person can command in a society using the totality of rights that he or she possesses. An entitlement helps people acquire capabilities (like being well nourished).

Colonial and postcolonial policies biased against agriculture helped contribute to sub-Saharan Africa’s decline in food output per capita from the early 1950s to the early 1990s. Africa’s food security is low because of substantial fluctuations in

domestic production and foreign-exchange reserves, reductions in food aid, and lack of a Green Revolution in most of the continent.

Inadequate capital (including that for health and social services), lack of technology, low educational and skill levels, the brain drain to urban areas, food price policies, below-market foreign exchange rates, and governmental urban bias contribute to low incomes in rural areas. Land concentration, the bias of technology toward large farmers, and large seasonal variations in income also affect rural poverty rates.

Policies that would increase rural income and reduce rural poverty are manifold. Land reform and redistribution, developing labor-intensive capital equipment, establishing rural credit agencies, agricultural research centers that conduct on-farm tests, institutes to develop and adapt technology for small farmers, an extension service integrated with development agencies, an irrigation authority that conducts careful feasibility studies of proposed projects, and government ministries that provide suitable and timely inputs to farmers are estimable goals. So, too, farm commodity and foreign exchange prices close to market-clearing rates; greater expenditure on social and educational services in rural areas; redistributing land to the rural poor; establishing agro industries, basic consumer goods industries, and other small industries in rural areas; and investment in marketing, transport, and storage facilities for agricultural commodities would improve the lot of the rural poor.

In LDCs, the small family farm is best positioned to have high productivity per hectare, at least if credit, extension, and inputs are readily accessible. Collective farming has not generally increased productivity because of disincentives for work, innovation, and savings.

Production-oriented rural development projects such as small-farmer credit, agricultural innovations and new technology, and improved extension services are likely to reduce agricultural terms of trade and thus reduce rural incomes in the short run. To increase incomes of the rural poor, production-oriented programs need to be combined with policies to improve relative agricultural prices and rural income distribution.

Agriculture biotechnology has substantial potential to increase yields per hectare and per person in developing countries.

The following subjects related to food and agriculture are covered in subsequent chapters: the food-population balance (Chapter 8); disguised unemployment in agriculture and rural–urban migration (Chapter 9); natural resources and the environment (Chapter 13); and the role of trade in agriculture in raising average farm incomes in developing countries (Chapter 17).

268 Part Two. Poverty Alleviation and Income Distribution

QUESTIONS TO DISCUSS

1.Give arguments in favor of LDCs concentrating their antipoverty programs in rural areas.

2.In what ways does agriculture contribute to economic growth?

3.Why is agricultural productivity in DCs so much higher than in LDCs?

4.How does a peasant economy differ from that of a commercial farm economy?

5.What do you expect the trend in foodgrain output per capita and food consumption per capita to be in LDCs in the next decade? What LDC regions are most vulnerable in the next decade? What LDC regions are most invulnerable in the next decade?

6.Explain and compare India’s progress since the early 1950s in increasing average food output and reducing hunger to China’s progress.

7.Explain sub-Saharan Africa’s negative growth in food output per person between the early 1960s and the late 1990s.

8.What factors contribute to the high incidence of rural poverty in LDCs?

9.What factors contribute to the high incidence of rural poverty among single female heads of households?

10.Indicate the forms of urban bias in LDCs. Give examples of policies of urban bias (or rural bias) in your own country or another one you know well. Has such a policy bias hampered development?

11.What policies are most effective in increasing rural income and reducing rural poverty? What strategies are needed to prevent rural development policies from increasing rural poverty through reduced agricultural terms of trade?

12.Is Soviet and Chinese collectivism (similar to that before 1975) practicable in LDCs? Compare and explain China’s agricultural progress in the Maoist period (1949–76) to that of the period after the 1979 agricultural reforms.

13.Identify an LDC whose productivity could be increased by land reform and indicate the type of reform you would advocate.

GUIDE TO READINGS

Eicher and Staatz (1998) is an excellent book of readings on agricultural and food needs, foreign aid, the agricultural transformation, models of agricultural development, the role of induced innovation, agricultural macroeconomic and trade policies, food and entitlements, urban bias, the role of human capital and institutions, market failure, technology development and sustainability, and agriculture in transition. Pinstrup-Anderson (2002:1201–1214) discusses food and agricultural policy

amid globalization. Ruttan (2002:161–184) analyzes sources and constraints on productivity growth in world agriculture. Hayami and Ruttan (1985), although more dated, is still a good source on international agricultural development. Other references include Tomich, Kilby, and Johnston (1995); Sanders, Ramaswamy, and Shapiro (1995); and Singh (1990). Binswanger and Deininger (1997:1958–2005) and Binswanger, Deininger, and Feder (1995:2659–2772) are leading articles on agrarian reform and agricultural policies.

Mosley (2002:695–714) sees development of foodcrop agricultural as pivotal to poverty reduction in Africa. Gaiha and Imai (2004:261–281) stress the importance of negative crop production shocks in the persistence of rural poverty in south India.

Data on food output and imports in DCs and LDCs are in publications from the U.S. Department of Agriculture (1986, 1988, 1999, and subsequent years); FAO (2003b and subsequent years); and Internet sources cited in the last paragraph. For a discussion of measuring food production, consumption, and demand in LDCs, see Evenson and Pray (1994:173–97) and Bouis (1994:199–226).

FIGURE 8-2. Population Growth in Developed and Developing Countries. A population growth rate of 0.8–1.8 percent yearly roughly divides the DCs from the LDCs.

Source: World Bank 2001h:44–45.

A major distinction between the three groups is the birth rate. (Following the conventional use, crude birth and death rates denote a number per 1,000, not percent.) The DCs’ and transitional countries’ crude birth rate are no more than 16 per 1,000. Most developing countries have birth rates of at least 25 per 1,000. Countries in category 2 generally fall between these two figures.

World Population: Rapid but Decelerating Growth

The world’s population is unevenly distributed geographically. Figure 8-3 shows regional distribution in 1950 and 1994, and projected distribution in 2025. The most rapidly growing regions are in the developing world: Asia, Africa, and Latin America. Their share of the global population increased from 70.0 percent in 1950 to 81.5 percent in 2000, and is expected to reach 85.1 percent in 2025. From 1950 to 2000, Asia, Africa, and Latin America grew at a rate of 2.1 percent yearly, a rate that doubles population in 33 years. Such growth is unprecedented in world history.

Africa is expected to have the most rapid growth, 2000 to 2025, 2.4 percent yearly. This rate, the same as its present rate, is the result of a traditionally high crude birth rate, 38 per 1,000 (with only 26 percent of married women using contraceptives), and a crude death rate, 14 per 1,000. The death rate plummeted from 1930 to 1990

274 Part Three. Factors of Growth

FIGURE 8-3. World Population by Region: 1950, 2000, and 2025 (projected). Asia’s, Africa’s, and Latin America’s share of the world population is increasing over time. Sources: U.N. Department of Economic and Social Affairs 1976:115; Ehrlich, Ehrlich, and Holden 1977:200–201; Population Reference Bureau 2000; World Bank 2001h:44–45; Bongaarts 2001.

because of improvements in health, nutrition, medicine, and sanitation. Although growth in Latin America and the Caribbean until 2025 is projected at 1.3 percent annually, its present yearly rate, 1.7 percent per year, is based on 23 births and 6 deaths per 1,000. Although Asia’s annual growth, 1.3 percent (birth rate of 20 and death rate of 7), will decline to 1.1 percent in the 25 years, 2000 to 2025, it is by far the most heavily populated region, with more than 60 percent of the world’s people.

Population size is a factor in shifting political and military power from the North Atlantic to Asia and the Pacific. The percentage of the world’s people living in North America and Europe (excluding the former Soviet Union) declined from 23.0 percent in 1900 and 29.5 percent in 1950 to 18.0 percent in 2000, and is expected to decrease to 12.3 percent in 2025. Six Asian countries plus the Russian Federation (partly in Asia) are on the list of the 10 largest countries in the world. In 2000, China and India constituted 41.3 percent of the world’s population (Table 8-1).

Most of the large increases in population between 1994 and 2025 are expected in the developing world. India’s addition to population during this period should exceed U.S. total population in 2025. India, China, Nigeria, Indonesia, Pakistan, and Ethiopia (listed in order of absolute growth) will each grow more from 2000 to 2025 than the United States, the world’s third most populated country. Bangladesh, Congo (Kinshasa), Iran, and Mexico follow in order of growth during these years (International Institute for Applied Systems Analysis 2004).

Although the world has witnessed unprecedented population growth during the last 50 to 60 years, faster growth than any other 50to 60-year period, the rate of growth has been decelerating since its peak rate of 2.3 percent yearly in 1960 to