The role of agriculture in economic development and poverty reduction : an empirical and conceptual foundation
Sarris, Alexander
The purpose of this paper is to review issues concerning the role of agriculture in promoting overall growth and poverty reduction. The major questions investigated are the following: Under what conditions is added or disproportional support for agriculture both growth enhancing overall as well as poverty reducing? Is there a trade-of between faster growth and poverty reduction in the context of agricultural development? Given that overall support for agriculture as an efficient growth enhancing and poverty reducing strategy can be justified, what are the most appropriate ways to support agriculture so as to maximize the effectiveness of such support in generating growth and reducing poverty? The review finds that the basic ingredients for faster agricultural growth are known, such as agricultural research and development, extension, rural infrastructure, education, etc. However, while we know the variables affecting agricultural total factor productivity, the profession is much less sure about the magnitudes of the relevant elasticities, as well as the ways in which these elasticities are affected by other factors. The review also revealed that there is by no means an unequivocal theoretical argument for agricultural development as an engine of growth. If any, recent theoretical contributions tend to rely on different structural properties between agricultural and non-agriculture concerning external effects, such as learning-by-doing.
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