A Model of Economic Development for Peasant Farms in Southern Italy
1964
Dean, Gerald W. | De Benedictis, Michele
This study uses dynamic linear programming to derive normative development plans through time for small land reform farms in the newly irrigated Metaponto plain of southern Italy. The analysis indicates great potential for internal savings and investment by peasant families and therefore rapid development possibilities for intensive fruit and vegetable cultivation. However, a risk discount of only 16 percent would eliminate orchards from the plans. Government investment in low interest loans and grants for development costs have a high potential return (about 85 percent) on these farms. To facilitate rapid development rates, technological advice to farmers provided by government appears critical. Methodologically, the model maximizes the present value of future returns from annual plans over a 60‐year horizon, allowing capital formation and optimum choice between short‐ and long‐term activities. The model could be easily reformulated to solve problems involving optimum timing of replacement of capital assets.
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