Discussing The Role Of Agriculture And Rural Development In National Economic Growth And Development

Elements of Agriculture-based Economic Development Strategy

Discuss About The Urban Economics And Economic Development.

The development economists today place great emphasis on study of agriculture. The have realized that the sector part from having a supportive role play a crucial role in economic progress of a nation. The agricultural sector and rural economy is of particular importance for lower income less developed and developing nations. There are three basic elements of an agriculture based economic development strategy. First, it focuses on accelerating growth through development of institutional, technological and price incentives to farmers (Sunley and Martin 2017). It particularly aims to increase productivity of small and marginal farmers. Second, it considers growing demand for agricultural output based on an employment oriented strategy of urban development. Third, the study is limited to the agriculture and rural sector of developing economies. The objective is to evaluate a diversified, nonagricultural and labor intensive rural development program that can provide direct and indirect support agriculture and farmers. Farmers should also support such program.

In national development, study of agriculture and rural economy thus is considered as an integral part. In developing economies, several industries are also dependent on agricultural sector. Without an integrated rural development, industry based economic growth would be interrupted. Even if it is successful, it can lead to internal imbalance in the economy (Thirlwall and Pacheco-López 2017). The resulted imbalance can aggravate already existing problem of poverty, unemployment and inequality. There are six primary aspects related agriculture and rural development that can that connects the sector to national development.

The first question is how to achieve a sustained increase in overall agricultural output along with an increase in per capita productivity. This aims to benefit small and landless farmers. Apart from securing interest of the farmer this also provides a food security to people and prepares the basis for the development of an urban industrial sector (Edwards 2017).

The second issue is related to increase in productivity of small farmers. The objective is to transform low productive small farmers to the status of a high productive large scale commercial enterprise. The commercialization of agricultural sector help to increase financial security farmers.

It is often find that peasant cultivators and family farmers opposes any kind of change. Development economics studies whether such behavior are irrational that is they are resisting their own well-being (Siggel 2016). It might be possible that they are behaving rationally depending on particular management environment.

Importance of Agriculture and Rural Economy in National Development

Development analysis also concerns with the potential impact of high risks that farmers in low-income countries face. The study also deals with the possible to cope with such risks and policies undertaken to reduce these risks.

The peasant agriculturalists are interested to know whether economic and price incentives provided to farmers are sufficient to increase agricultural output. In case, the incentives are unable to boost productivity it is necessary to what specific type of institutional and structural changes are required to achieve intended agricultural development.

Another interesting matter is whether gain in agricultural productivity enough to improve overall rural life or it needs employment creation in off farm sector that can enhance medical, educational and other social services (Sunley and Martin 2017).

Growth in population, increasing incidence of poverty and pressure of land are considered as interrelated problems in economics. Increasing population increases needs for people. If population continues to grow then this creates movement of people in search of necessary goods and services. Division of resources among increasing number of people leads to entitlement of less resources to each people (Nkonya, Mirzabaev and Von Braun, 2016). High consumption of existing assets lead to an increase in incidence of poverty.

Over population in less developed nations is considered as a significant contributor of poverty. However, economists often differ in their opinion regarding the direction of relationship between poverty and population growth. That is whether poverty is a cause or result of over population.  Some economists are of the view that there is circular relation between poverty and population growth where both the factors affect each other (Coale and Hoover 2015). In Africa, poverty is considered an important factor responsible for high poverty and low yield in agriculture. In Asia also poverty is largely created due to a high population growth.

Population and poverty can further be connected to land with the concept of carrying capacity of land. Increasing population put a greater pressure on carrying capacity of land. The pressure on land limits economic growth in less developed and developing nations.  This strains economies of these nations to achieve a high growth in agriculture in order to maintain a higher standard of living. Studies have found that in Asia, population growth gives rise to the problem of poverty and inequality.

Increase in population result in higher demand for natural resources. The supply of land is limited by the geographical boundary of a nation. With growth of population, there are less availability of land per person (Platteau 2015). The growing pressure on land leads to decreasing return to land. Growing population not only put pressure on lands used in cultivation but also on lands used for non-productive purposes such as used for living areas. People therefore forced to shift non-productive and less suitable places known as marginal lands. As people starts using less suitable lands, productivity unit of land decreases. This results in a decline in income per unit of land leading to poverty.

Population Growth, Poverty, and Land Pressure

Population, poverty and land pressure are thus interrelated events. Low income economies usually trap in a situation of high population growth, high poverty and increased pressure of land. High population growth increases pressure on land which declines land productivity (Sukhtankar 2017). With decline in productivity income reduces aggravating the problem of poverty. Poor nations being mostly dependent of land are more vulnerable to population growth.

Economic planning is described as an attempt by central government body to coordinate economic decision making in the long run. Economic planning is made to direct or indirectly control major economic variables such as economic growth, national income, employment, consumption, investment, saving and others in order to achieve some pre-determined objectives. Economic plan simple consists of a set of quantitative economic targets that are to be achieved within a given period. Specific strategies are designed to attain stated objectives. A comprehensive plan covers all the major part of national economy while a partial plan focuses only some specific parts of the national economy (Peet and Hartwick 2015). National planning is believed to provide essential institutional and organizational support that help to overcome main obstacles in achieving targeted economic growth and development. The developing world are sort to follow the mechanism of national planning to fast catch up with developed nations. They believe that they need a comprehensive economic planning to achieve a sustained economic growth. A well-designed and properly executed national planning has an important role to play in stimulating economic growth and alleviating poverty.

In developing economies there are two primary components of institutional planning. Through planning government in developing economies makes deliberate use of domestic saving and foreign funds to undertake public investment projects. In the process it also aims to mobilize use of scarce resource in such a way that in can maximize long run economic activities. Examples of such public investment project include development of transportation system (rail, road etc), building schools and other infrastructural development (Pezzey and Toman 2017). Government by designing suitable police aims to stimulate, direct or control economic activities of private sector to accomplish goal of harmonizing the relationship between objective of private firms and social goals of central government.

The dependency of developing economies on centralized national planning is supported with both economic and institutional arguments. The four main rationale for undertaking development planning are as follows

Markets in developing nations are characterized by imperfect structure of market and operation. Factors and commodity markets are not properly organized. In such a market, prices fail to reflect real cost the goods, services and resources to the society. The distorted price cannot ensure efficient allocation of resources (Dang and Pheng 2015). This kind of market failure lead to disparities between private and social valuation of different investment projects. In the absence of government private players can dominate the market by restricting quantity or charging high price. Comprehensive planning can address the issue of market failure.

Developing economies fear of losing their limited economic resources by failure to make efficient allocation of resources. Investment projects in the developing countries should be taken after proper analysis of productivity. Skilled workers needs to be employed in sectors where their contribution can be felt widely (Schumpeter 2017). Economic planning guide allocation of resources by coordinating most beneficial investment projects for the economy. Competitive markets on the other hand tend to direct investment more towards the areas of social priority.

A detailed design of economic planning can have an important psychological and attitudinal impact on fragmented or diversified population. It may convince people to support government in eliminating poverty, diseases, ignorance and stimulate national powers (Sukhtankar 2017). Citizens that work together with government help to build a strong nation with empowerment of growth and development.

Development of comprehensive economic plan often becomes a necessary condition for receiving bilateral and multilateral foreign aid. With assistance of foreign fund government of a nation can undertake better growth and development strategy.

References

Coale, A.J. and Hoover, E.M., 2015. Population growth and economic development. Princeton University Press.

Dang, G. and Pheng, L.S., 2015. Theories of economic development. In Infrastructure investments in developing economies (pp. 11-26). Springer, Singapore.

Edwards, M.E., 2017. Regional and urban economics and economic development: theory and methods. Routledge.

Nkonya, E., Mirzabaev, A. and Von Braun, J. eds., 2016. Economics of land degradation and improvement: a global assessment for sustainable development. Springer Open.

Peet, R. and Hartwick, E., 2015. Theories of development: Contentions, arguments, alternatives. Guilford Publications.

Pezzey, J.C. and Toman, M.A., 2017. The economics of sustainability. Routledge.

Platteau, J.P., 2015. Institutions, social norms and economic development. Routledge.

Schumpeter, J.A., 2017. Theory of economic development. Routledge.

Siggel, E., 2016. Development economics: a policy analysis approach. Routledge.

Sukhtankar, S., 2017. Replications in development economics. American Economic Review, 107(5), pp.32-36.

Sunley, P. and Martin, R., 2017. Paul Krugman’s geographical economics and its implications for regional development theory: a critical assessment. In Economy (pp. 25-58). Routledge.

Thirlwall, A.P. and Pacheco-López, P., 2017. Economics of development: theory and evidence. Palgrave.