University of Puthisastra

Economics Development Class

Lecture 9: Agricultural Transformation
and Rural Development

Professor: Hong Muyheng

January 03, 2017

(Week 9)
 Chapter 9

Agricultural
Transformation and
Rural Development
 The Imperative of Agricultural Progress and
Rural Development
• The heavy emphasis in the past on rapid
industrialization may have been misplaced
• Agricultural development is now seen as an
important part of any development strategy
• There are three complementary elements of an
agriculture and employment-based strategy:
1. Accelerated output growth
2. Rising domestic demand for agricultural output
3. Non-agricultural rural labor intensive rural development
activities that are supported by the farming community

9-3
9-4
 Agricultural Growth: Past Progress and
Current Challenges
• Although agriculture employs the majority of
the LDC labor force, it accounts for a much
lower share of total output
• Agricultural production is rising but unevenly
• There should be much attention in increasing
production.

9-5
Figure 9.1 As Countries Develop, the Shares of GDP and Labor
in Agriculture Tend to Decline, but with Many Idiosyncrasies

9-6
Figure 9.2 Cereal Yields by World Region, 1960-
2005

9-7
9-8
 Agricultural Growth: Past Progress and
Current Challenges
• Africa-malnutrition (starvation) and famine
(death of starvation) inspire calls for a green
revolution.
• Typically, governments do not prioritize
agriculture and emphasize industrialization
• Focus on governmental and NGO initiatives in
poverty alleviation and agricultural reform

9-9
9-10
 Agricultural Growth: Past Progress and
Current Challenges
• The structure of Agrarian Systems in the
Developing World. Three types of countries.
1. Agriculture based countries
2. Transforming countries
3. Urbanized countries

9-11
Figure 9.3 Agriculture’s Contribution to Growth and the
Rural Share in Poverty in Three Types of Countries

9-12
Table 9.1 Land Productivity in Developed and
Developing Countries

9-13
 Table 9.2 Distribution of Farms and Farmland by Operational Farm
Size and Land Tenure Status In Selected Developing Countries in Asia
and Latin America

9-14
Table 9.3 Changes in Farm Size and Land Distribution

9-15
 The Important Role of Women
• Women provide 60% to 80% of agricultural labor in
Africa and Asia, and 40% in Latin America
• Women work longer hours than men
• Government assistance programs tend to reach men,
not women
• You know why?

9-16
 The Economics of Agricultural Development:
Transition From Peasant to Commercial Farming

• Subsistence farming: risk aversion, uncertainty,

and survival
– Traditional two-factor neoclassical model is not
adequate
– Price uncertainty and limited access to credit and
insurance explains risk aversion
– Risk averse subsistence farmers prefer technologies
that combine low mean-per-hectare with low
variance to alternative high yielding technologies
– Efforts to minimize risk and remove commercial and
institutional obstacles to small farmer innovation are
necessary 9-17
Figure 9.5 Small-Farmer Attitudes toward Risk: Why It Is
Sometimes Rational to Resist Innovation and Change

9-18
Figure 9.6 Crop Yield Probability Densities of Two
Different Farming Techniques

9-19
Figure 9.7 Incentives under Sharecropping

9-20
 The Economics of Agricultural Development:
Transition From Peasant to Commercial Farming

• Sharecropping and interlocking factor markets

– Intrinsically Inefficient due to poor incentives (Marshall)
– Monitoring approach (Cheung)
– Giving sharecroppers a larger share of the produce and
security of tenure on land can increase efficiency
– Interlocking factor markets in sharecropping act against
peasant interests

9-21
 The Economics of Agricultural Development:
Transition From Peasant to Commercial Farming

• New trends of agriculture development

around the world:
1.The transition to mixed and diversified
farming
2.From divergence to specialization: modern
commercial farming

9-22
 Toward a Strategy of Agricultural and Rural
Development
• Improving small-scale agriculture
– Institutional and pricing policies: Providing
necessary economic incentives
– Adapting to New opportunities and New
Constraints
• Conditions for Rural development
– Land Reform
– Supportive polices
– Integrated Development Objectives
9-23
Case Study: Kenya

9-24
9-25
9-26
 Group Homework 3 (Final)
• Choose one of the topic here, then make a short slide
presentation next 3 Weeks. Find about government’s
vision, policies, regulations, statistic, achievement and
so forth in each country below regarding to the Health
and Education sector.
• This activity provide each of you 5 credits.
1. Cambodia
2. Japan
3. United States
4. Thailand
5. Vietnam etc.
8-27
 Q & A session!

THANKS YOU!
សូមអរគុណ!

28