Development Economics: The Role of Agriculture in Development

236 Pages·2016·1.9 MB·English

by  P. N. Raja Junankar (auth.)

Development Economics
Development Economics
The Role of Agriculture in Development
P. N. (Raja) Junankar
Honorary Professor, Industrial Relations Research Centre, UNSW Australia,
Emeritus Professor, Western Sydney University
and
Research Fellow, IZA, Bonn, Germany
DEVELOPMENT ECONOMICS: THE ROLE OF AGRICULTURE IN DEVELOPMENT
Editorial matter, selection and introduction © P. N. (Raja) Junankar, 2016
Foreword © G. C. Harcourt, 2016
Chapter 2.1 © Taylor and Francis, 1976; Chapter 2.2 © Economic and Political
Weekly, 1972; Chapter 2.3 © Taylor and Francis, 1984; Chapter 2.4 © The Indian
Econometric Society, 1986; Chapter 3.1 © Economic and Political Weekly, 1973;
Chapter 3.2 © Economic and Political Weekly, 1975; Chapter 3.3 © Economic
and Political Weekly, 1986; Chapter 4.1 © Taylor and Francis, 1980; Chapter 4.2
© Taylor and Francis, 1980; Chapter 4.3 © University of Delhi, 1982; Chapter 4.4
© Taylor and Francis, 1989; Chapter 5.1 © IZA, 2014; Chapter 6.1 © Taylor and
Francis, 2009
Softcover reprint of the hardcover 1st edition 2016 978-1-137-55521-2
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DOI: 10.1057/9781137555229
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Typeset by MPS Limited, Chennai, India.
To
My wife, Susie, for her patience and support
in producing this book
For
The millions of the poor in developing countries
Contents
List of Figures and Tables viii
Foreword by G. C. Harcourt xi
Preface and Acknowledgements xii
1 Introduction 1
2 Land Tenure, Agricultural Productivity and Taxation 23
2.1 Land Tenure and Indian Agricultural Productivity 25
2.2 Land Ceilings as a Tax on Agriculture: A Note 46
2.3 Review of Palanpur: The Economy of an Indian Village 49
2.4 Agricultural Taxation in Less Developed Countries:
Effects of a Tax on Ineffi ciency 54
3 Poverty, Mobility and Inequality 71
3.1 Poverty in India: A Comment 73
3.2 Green Revolution and Inequality 77
3.3 Mobility and Inequality in Indian Agriculture 86
4 Do Farmers in Developing Countries Maximise Profi ts? 97
4.1 Tests of the Profi t-Maximisation Hypothesis:
A Study of Indian Agriculture 99
4.2 Do Indian Farmers Maximise Profi ts? 119
4.3 Neo-Classical Economics and Indian Agriculture:
An Econometric Analysis of Production Behaviour 133
4.4 The Response of Peasant Farmers to Price Incentives:
The Use and Misuse of Profi t Functions 156
5 Informal Labour Markets 171
5.1 The Informal Labour Market in India: Transitory or
Permanent Employment for Migrants? 173
6 Microfi nance and Women’s Empowerment 203
6.1 Factors Infl uencing Women’s Empowerment on
Microcredit Borrowers: A Case Study in Bangladesh 205
Index 225
vii
List of Figures and Tables
Figures
1.1 Linkages between agricultural and industrial sectors 10
2.1.1 Diagram 1 28
2.1.2 Diagram 2 35
2.4.1 Diagram 1 61
2.4.2 Diagram 2 63
3.3.1 Diagram 1 89
5.1.1 Distribution of employment across industries 180
5.1.2 Distribution of households across occupations 181
5.1.3 Employment category based on migration status 181
5.1.4 Migrants by industry 182
5.1.5 Migrants by occupation 182
5.1.6 Migrants and income source 183
5.1.7 Caste and religion by sector 184
5.1.8 Kernel densities of log income by employment 185
5.1.9 Purpose of loan by sector 187
Tables
1.1 Share of agriculture in GDP and total employment
(developing countries) 7
1.2 Share of agriculture in GDP and total employment 7
1.3 Rural population (%) and poverty (headcount at
$2.00 per day, %; developing countries) 8
1.4 Rural population (%) and poverty (headcount at
$2.00 per day, %) 8
1.5 Vulnerable employment 11
A1 Share of employment in agriculture (%) 18
2.1.1 Distribution of area leased in (%) by Farm Size A 30
2.1.2 Relationship between input/output per hectare
and tenancy and farm size (1968/69) 31
viii
List of Figures and Tables ix
2.1.3 Cobb-Douglas production functions: farm size effects 33
2.1.4 Cobb-Douglas production functions: effects of tenancy 36
2.1.5 Cobb-Douglas production functions: tenants and owners 40
2.1.A Cobb-Douglas production functions: effects of tenancy 42
2.2.1 Likely effects of imposition of land ceiling 48
3.1.1 Table 1 75
3.2.1 Gini co-effi cients 79
3.2.2 Atkinson Inequality index 81
3.2.3 Changes in land ownership 82
3.2.4 Changes in farm size A 83
3.2.5 Changes in farm size B 83
3.2.6 Changes in Farm Business Income 83
3.3.1 Regression results: area owned normalised by mean 91
3.3.2 Regression results: log deviations of area owned 92
3.3.3 Regression results: log deviations of area owned – Zellner’s
Seemingly Unrelated Regression Estimation 92
3.3.4 Regression results: log deviations of FBI 93
3.3.5 Regression results: log deviations of FBI – Zellner’s
Seemingly Unrelated Regression Estimation 93
4.1.1 Frequency distribution of farm size (TOTLAND) 102
4.1.2 Mexican wheat profi t functions (1969/70):
Zellner’s Seemingly Unrelated Regression Estimation 106
4.1.3 Mexican wheat profi t functions (1969/70) 108
4.1.4 Mexican wheat profi t functions (1969/70) 109
4.1.5 Mexican wheat profi t functions (1969/70) 110
4.2.1 Profi t functions for Thanjavur district (Tamil Nadu) 1969/70 125
4.2.2 Profi t and variable input functions for Kuruvai ADT-27,
Thanjavur district (Tamil Nadu) 1969/70 127
4.2.3 Profi t and variable input functions for Samba CO 25,
Thanjavur district (Tamil Nadu) 1969/70 128
4.2.A.1 Profi t functions for Thanjavur district (Tamil Nadu) 1969/70 129
4.3.1 Distribution of farms, cultivated area and average
size of farm 139
4.3.2 Translog profi t functions: tests of restrictions 141
4.3.3 Amounts in rupees borrowed (per cent of total
amount borrowed) – sources of loans (1969/70) 143
x List of Figures and Tables
4.3.A.1 Kuruvai ADT27: unrestricted estimates
(standard errors in parentheses) 145
4.3.A.2 Kuruvai ADT27: Test 1 (standard errors in parentheses) 146
4.3.A.3 Kuruvai ADT27: Test 2 (standard errors in parentheses) 148
4.3.A.4 Kuruvai ADT27: Test 3 (standard errors in parentheses) 149
4.3.A.5 Samba CO25: unrestricted estimates 149
4.3.A.6 Samba CO25: Test 1 151
4.3.A.7 Samba CO25: Test 2 152
4.3.A.8 Samba CO25: Test 3 153
4.4.1 Comparison of Cobb-Douglas Profi t Functions 164
5.1.1 Summary statistics 179
5.1.2 Caste and religion by source of income 183
5.1.3 Caste and religion by occupation 184
5.1.4 Distribution of log incomes by sector 186
5.1.5 IV-Probit estimates of the probability for informal
sector employment 191
5.1.6 Marginal effects of multinomial logit regression
(full sample) 196
5.1.7 Marginal effects of multinomial logit regression
(male only sample) 197
6.1.1 Borrowers and non-borrowers’ ownership, purchase
decision, control, mobility and awareness indices
according to districts 213
6.1.2 Empowerment index of borrowers and non-borrowers
according to districts 214
6.1.3 Correlation matrix of the variables 216
6.1.4 Probit model: factors affecting empowerment index
(borrowers and non-borrowers) 217
6.1.5 Probit model: factors affecting empowerment index
(pooling full data set) 218
6.1.6 Probit model: factors affecting empowerment index
(based on different income level households) 220
Foreword
The papers on development gathered together by Raja Junankar in this
volume bear witness to a critically minded, technically equipped, free spirit
tackling one of the most important issues with which relevant economic
analysis should be concerned. Junankar combines economic theory with case
studies and econometric testing of theoretical inferences. He has a masterly
understanding of theories of developing economies from Adam Smith
to the present day. He starts by examining the effectiveness of dominant
mainstream approaches in explanation and policy making. He finds them
wanting and provides a rich narrative containing historical experiences,
institutional change, voluntary and involuntary, and, most of all, the role of
unequal power amongst decision-makers in explaining what has happened to
all modes of production in both the world before the industrial revolution in
Europe, dominated by the marauding imperial powers, and now the modern
interrelated world economy, dominated by large multinational oligopolies.
Junankar’s compassion and humanity shine through, his mind changes
as evidence gathers and he firmly rejects the mainstream approach of “have
model, will travel,” to modestly assess what we know and what we do not
know about complicated ongoing processes.
I learnt an enormous amount from his clearly expressed overall narrative
and detailed papers and recommend the selection as required reading for
students, teachers and policy makers.
Professor Emeritus G. C. Harcourt
School of Economics, UNSW Business School
xi