Economics of Agricultural Development: 2nd Edition (Routledge Textbooks in Environmental and Agricultural Economics)

475 Pages·2010·7.04 MB·English

by  George W. Norton, Jeffrey Alwang, William A. Masters

Economics of
Agricultural Development
Economics of Agricultural Development examines the causes, severity, and effects of per-
sistent poverty, rapid population growth, and malnutrition in developing countries.
It discusses potential solutions to these problems, and considers the implications of
globalization for agriculture, poverty, and the environment.
Areas covered in the book include:
• The sustainability of the natural resource environment
• Gender roles in relation to agriculture and resource use
• The contribution of agricultural technologies
• The importance of agricultural and macroeconomic policies as related
to development and trade, and the successes and failures of such
policies
• The implications for what might be done in the future to encourage more
rapid agricultural and economic development
The globalization of goods, services, and capital for agriculture is fundamental
to the future of developing countries and has major implications for the fight against
poverty and sustainability of the environment. In recent years, agriculture has once
again returned to a position of centre stage as food price volatility has led countries to
re-examine their development strategies.
This new edition of the essential textbook in the field builds on the 2006 original
and reflects the following developments:
• The increased impact of climate change
• Issues affecting agricultural markets such as bio-fuels, the rise in farm
prices, and energy costs
• The move to higher valued agricultural products
This book will be essential reading for undergraduate students seeking to un-
derstand the economics of agricultural development and the world food system, in-
cluding environmental and human consequences of agricultural development, inter-
national trade and capital flows.
This book contains a wealth of real world case studies and is now accompanied
by a website that includes powerpoint lectures, a photo bank, and a large set of dis-
cussion and exam questions.
George W. Norton is Professor of Agricultural and Applied Economics at
Virginia Polytechnic Institute and State University, Blacksburg, Virginia, USA.
Jeffrey Alwang is Professor of Agricultural and Applied Economics at
Virginia Polytechnic Institute and State University, Blacksburg, Virginia, USA.
William A. Masters is Professor of Agricultural Economics at Purdue
University, West Lafayette, Indiana, USA.
Economics of
Agricultural
Development
WORLD FOOD SYSTEMS and
RESOURCE USE
SECOND EDITION
GEORGE W. NORTON
JEFFREY ALWANG
Virginia Polytechnic Institute
and State University
WILLIAM A. MASTERS
Purdue University
First edition published 2006
Second edition 2010
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
Simultaneously published in the USA and Canada
by Routledge
270 Madison Avenue, New York, NY 10016
Routledge is an imprint of the Taylor & Francis Group, an informa business
This edition published in the Taylor & Francis e-Library, 2010.
To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.
© 2006, 2010 George W. Norton, Jeffrey Alwang and William A. Masters
All rights reserved. No part of this book may be reprinted or reproduced or utilised
in any form or by any electronic, mechanical, or other means, now known or
hereafter invented, including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
Norton, George W.
Economics of agricultural development / by George W. Norton, Jeffrey Alwang,
and William A. Masters. — 2nd ed.
p. cm.
Includes bibliographical references and index.
1. Agriculture—Economic aspects. I. Alwang, Jeffrey R. II. Masters, William A. III.
Title.
HD1415.N67 2010
338.1—dc22
2009043168
ISBN 0-203-85275-3 Master e-book ISBN
ISBN10: 0-415-49264-5(hbk)
ISBN10: 0-415-49424-9(pbk)
ISBN10: 0-203-85275-3(ebk)
ISBN13: 978-0-415-49264-5(hbk)
ISBN13: 978-0-415-49424-3(pbk)
ISBN13: 978-0-203-85275-0(ebk)
Contents
Preface vii
Part 1. Dimensions of World Food and Development Problems 1
1 — Introduction 3
2 — Poverty, Hunger, and Malnutrition 25
3 — Economics of Food Demand 47
4 — Population 69
Part 2. Development Theories and the Role of Agriculture 87
5 — Economic Transformation and Growth 89
6 — Development Theory and Growth Strategies 112
Part 3. Agricultural Systems and Resource Use 129
7 — Agriculture in Traditional Societies 131
8 — Agricultural Systems and Their Determinants 146
9 — Resource Use and Sustainability 161
10 — Human Resources, Family Structure, and Gender Roles 185
Part 4. Getting Agriculture Moving 205
11 — Theories and Strategies for Agricultural Development 207
12 — Research, Extension, and Education 227
13 — Land and Labor Markets 260
14 — Input and Credit Markets 281
15 — Pricing Policies and Marketing Systems 301
Part 5. Agricultural Development in an Interdependent World 325
16 — Agriculture and International Trade 327
17 — Trade Policies, Negotiations, and Agreements 349
18 — Macroeconomic Policies and Agricultural Development 365
19 — Capital Flows, Foreign Assistance, and Food Aid 393
20 — Lessons and Perspectives 415
Glossary of Selected Terms 429
Authors Cited 435
Works Cited 439
Subject Index 450
v
vi
Preface
Persistent poverty, rapid population growth, and malnutrition in de-
veloping countries are among the most serious issues facing the world
today. Economics of Agricultural Development examines the causes, se-
verity, and effects of these problems. It identifies potential solutions,
and considers the implications of globalization for agriculture, poverty,
and the environment. It identifies linkages in the world food system,
and stresses how agricultural and economic situations in poor coun-
tries affect industrialized nations and vice versa. It focuses on the role
that agriculture can play in improving economic and nutritional well-
being and how that role might be enhanced. It explores causes and im-
plications of agricultural commodity price volatility.
Much has been learned about the roles of technology, education,
international trade and capital flows, agricultural and macroeconomic
policies, and rural infrastructure in stimulating agricultural and eco-
nomic development. In some cases, the same factors can contribute to
economic growth and lead to price and income instability or environ-
mental risk. These lessons and other issues are examined in the book
using basic tools of economic analysis. The need is stressed for improved
information flows to help guide institutional change in light of social,
cultural, and political disruptions that occur in the development pro-
cess.
The challenge in studying the economics of agricultural develop-
ment is to build a broad view of the problem, and to bring economic
theory to bear on specific challenges faced by the rural sector and on
means for utilizing agricultural surpluses to further overall economic
development. The goal of this book is to help students and other inter-
ested practitioners gain an understanding of the agricultural develop-
ment problem, including the environmental and human consequences
of different development paths, and the influence of international trade
and capital flows. It is designed to help students develop skills that will
enhance their capability to analyze world food and development prob-
lems.
vii
PREFACE
This book interprets for undergraduates the economics of devel-
opment and trade, including the importance of extending economic
theory to account for institutions, imperfect information, and the will-
ingness of people to exploit others and to act collectively. This exten-
sion provides important insights for development policy and helps ex-
plain why some countries develop while others are left behind. The
role of the government in promoting broad-based development is ex-
plored. The book also covers topics related to sustainability of the envi-
ronment, gender roles in relation to agriculture and resource use, and
the importance of macroeconomic policies as related to development
and trade.
This new edition of the book addresses the causes and implica-
tions of recent sharp commodity price increases. It contains added dis-
cussion of economic issues related to biofuels and climate change and
how they affect agriculture in developing countries.
INTENDED AUDIENCE
Economics of Agricultural Development is designed as a comprehensive
text for the first course on the economics of world food issues and agri-
cultural development. The book is aimed at undergraduate students,
with the only prerequisite a course in introductory economics. Students
in undergraduate courses that address world food and agricultural de-
velopment represent a wide variety of majors. Economic jargon is kept
to a minimum and explained where necessary, and the book sequen-
tially builds a base of economic concepts that are used in later chapters
to analyze specific development problems. A second audience for the
book is those who work for public and private international develop-
ment organizations.
ORGANIZATION of the BOOK
Agricultural development is important for rural welfare and for over-
all economic development. Part One of the book considers the many
dimensions of the world food – income – population problem in both a
human and an economic context. After the severity and dimensions of
the problem have been established, Part Two examines the economic
transformation experienced by countries as they develop, sources of
economic growth, and theories of economic development, including
the role of agriculture in those theories. Part Three provides students
with an overview of traditional agriculture, agricultural systems and
their determinants in developing countries, with particular attention to
issues such as environmental sustainability and gender roles. Part Four
then identifies agricultural development theories and the technical and
viii
PREFACE
institutional elements required for improving the agricultural sector. It
stresses the need to build on and modify current agricultural develop-
ment theories. Finally, Part Five considers the importance of the inter-
national environment, including trade and trade policies, macroeco-
nomic policies, capital flows, and foreign assistance, including food aid.
The concluding chapter integrates various development components
addressed in the book and discusses future prospects for agricultural
development.
ACKNOWLEDGMENTS
This edition of the book has benefited from the contributions of numer-
ous individuals, including feedback from students in classes at Virginia
Tech and Purdue. We thank Laura McCann and Laurian Unnevehr for
reviewing an earlier draft as well as proposed revisions. The encour-
agement and assistance of our colleagues at Virginia Tech and Purdue
are gratefully acknowledged. We especially thank Brad Mills, David
Orden, Dan Taylor, S.K. DeDatta, Anya McGuirk, Herb Stoevener, Jerry
Shively, Sally Thompson, and Wally Tyner. The book has benefited
greatly from discussions and interactions on development issues over
many years with Phil Pardey, Stan Wood, Paul B. Siegel, Terry Roe, Bill
Easter, Dan Sisler, Brady Deaton, Mesfin Bezuneh, and numerous gradu-
ate students.
We thank Robert Langham and other editors at Routledge Press
for their assistance, and we especially want to thank Mary Holliman of
Pocahontas Press in Blacksburg, Virginia, for her invaluable editorial
and production assistance. We also thank Daren McGarry, Steve
Aultman, Jessica Bayer, Jacob Ricker-Gilbert, and Adam Sparger with
assistance on figures and illustrations.
George Norton
Jeffrey Alwang
Will Masters
ix