AGRICULTURAL TRANSFORMATION AND RURAL DEVELOPMENT

(According to Michael P. Todaro and Stephen C. Smith) 1. The Imperative of Agricultural Progress and Rural Development Traditionally, the role of agriculture in economic development has been viewed as passive and supportive but today, the agricultural sector in particular and the rural economy in general must play and indispensable part in any overall strategy of economic progress. There are three basic complementary of an agriculture and employment based strategy of economic development: Accelerated output growth through technological, institutional, and price incentive changes designed to raise the productivity of small farmers Rising domestic demand for agricultural output derived from an employmentoriented urban development strategy Diversified, nonagricultural, labor intensive rural development activities that directly and indirectly support and supported by the farming community

2. The Structure of Agrarian System in The Developind World The comparison between agricultural productivity in developed nation and developing nation is: The highly efficient agriculture of the developed countries, where substantial productive capacity and high output permit a very small number of farmers to feed entire nations The inefficient and low productivity agricultural of developing countries, where in many instances the agricultural sector can barely sustain the farm population

3. Peasant Agriculture in Latin America, Asia, and Africa  Similarities and Differences between Latin America and Asia : - Although Latin America and Asia have very different heritages and cultures, peasant life in impoverished areas of these two region is in many ways similar.

- In Latin America, the peasants plight is rooted in the latifundio-manifundio system. In Asia, it lies primarily in fragmented and heavily congested dwarf parcels of land.

 Subsistence Agriculture and Extensive Cultivation in Africa: The basic variables input in African agriculture is farm family and village labor. The low productivity subsistence farming characteristic of most traditional African agricultural results from a combination of three historical forces restricting the growth of output: - In spite of the existence of some unused and potentially cultivable land, only small areas can be planted and weeded by the firm family at a time when it uses only traditional tools such as panga - Given the limited amount of land that a farm family can cultivate in the context of traditional to be intensively cultivated. - Labor is scarce during the busiest part of the growing season, planting and weeding times.

Although traditional African communal social system differ markedly from agrarian structure prevalent throughout much of Asia and Latin America, the contemporary economic status of most poor farmers is not different among three regions.

4. The Economics of Agricultural Development: Transition from Peasant Subsistence to Specialized Commercial Farming  Subsistence Farming: Risk Aversion, Uncertainty, Survival Peasant farmer do act rationally and responsive to economic incentives and opportunities. Efforts to minimize risk and remove commercial and institutional obstacles to small-farmer innovation are therefore essential requirements of agricultural and rural development.  Sharecropping and Interlocking Factor Markets Sharecropping occur when a peasant farmer uses the landowners farmland in exchange for a share of food output, such as a half of the rice or wheat he grows.

 The Transition to Mixed and Diversified Farming The success or failure of such efforts to transform traditional agriculture will depend not only on the farmers ability and skill in raising his productivity but, important more, on the social, commercial, and institutional conditions under which he must function. Evidence from such diverse countries as Colombia, Mexico, Nigeria, Ghana, Kenya, Thailand, and the Philippines show that under proper conditions, small farmers are responsive to price incentive and economic opportunities will make radical changes in what they produce and how they produce it.

 From Divergence to Specialization: Modern Commercial Farming The specialized farm represent the final and most advanced stage of individual in a mixed market economy. In specialized farming, the provision of food for the family with some ketable surplus is no longer the basic goal. In some ways, specialized farming is no different in concept or operations from large industrial enterprises.

5. Toward a Strategy of Agricultural and Rural Development  Sources of small-Scale Agricultural Progress - Technological change and innovation - Appropriate government economic policies - Supportive social institutions  Condition for General Rural Advancement - Modernizing farm structures to meet rising food demands - Creating an effective supporting system - Changing the rural environment to improve levels of living

INDUSTRIAL DEVELOPMENT
According to Lewis 1. Lewis' strategy of industrial development: surplus labour market size labour cost financial investment risk aversion

2. There are three main elements in Lewis' approach to industrial development: markets, resource availability economy policy formulation.

3. Lewis indicated that the secret of successful industrial development rested on a countr y specialising in those goods "to which its resources are most appropriate" and the avo idane of others

4. Lewis considered four possible ways of achieving `full' employment through industrial development: exchange rate policy, namely, a devaluation of the currency which would reduce t he costsof exports in terms of world prices. Such a policy measure would enhance international price competitiveness thus expanding foreign demand and through t he foreigntrade multiplier, increasing domestic income and employment. The inc ome and employment effects of this policy measure depend on the relative price elasticities of demand for imports and exports. involves the use of an incomes policy, whereby the price level would be reduced by "cutting wages, salaries, profit, rents and other incomes. This would have the same ultimate effects as devaluation; production would expand, imports be cut, p ayments balance and employment be created", while maintaining a nominal excha nge rate policy anchor

which is considered the best theoretical and long- term solution, is increasing pro ductivity. This requires a multi-dimensional policy framework since increases

in productivity depend on health and nutritional facilities, education and training, incentives, capital allocation and use and the social and political philosophy of th e people of the country. By increasing productivity, especially in the agricultural sector, incomes would increase and consequently, the proportion spent on manufa ctured goods would rise. relates to the direct promotion of manufacturing activities and is considered as the only practical alternative to develuation. A "deliberate restriction of imports and concentration on an attempt to increase production for home consumption" could be adopted. Lewis therefore suggested an `import substitution' strategy of industr ial development as an alternative.

5. Lewis' strategy of industrial development was conceived in the socio-economic and p olitical environments of the 1940s and 1950s. Although the domestic, regional and in ternational economic environments have changed over the past four to five decades, h is strategy provides certain fundamental elements of industrial development in small d eveloping states. These are: the need to focus on the international export market, with an emphasis on internat ional niche marketing. Where relevant, regional integration should support the ex port drive in the form of regional industries since the export market is vital to the industrialisation drive, small developing cou ntries need to pursue policy measures which would maketheir products internatio nally competitive given their narrow resource base andlimited bargaining power, small developing countries have to establish strategic alliances with international