The major part of production assets of the country is in the form of agricultural assets like land, irrigation facilities, tractors, agriculture implements, ploughs, pump sets and storages. As the industrial and services sectors develop further, the agricultural productivity and production must also rise to sustain the industrial development by feeding the increasing industrial workforce. However, agriculture can release labour for industrial development if its productivity rises. Farmers in these developing countries have to produce food over and above their subsistence needs so as to provide necessary food to their urban population. the nature of agriculture's role in the process of economic growth. The distribution of national income by industrial origin for the period 1950-51 to 1979-80 shows that the share of various agricultural commodities, animal husbandry and ancillary activities has always been more than 40 percent. At the global level, Indian agriculture has ranked in certain commodities. In India, agriculture meets almost the entire food requirements of the people. Copyright © 2018-2021 BrainKart.com; All Rights Reserved. Role of Agriculture in Economic Growth: Economic development is a process whereby the real national income of a country increases over a long period of time. Agriculture contributes to a sizeable part of exports and it is an important segment of imports of the economy. As a result of this, the economic gap between the rich and the poor shrinks. February 2014 Online at https://mpra.ub.uni-muenchen.de/55536/ MPRA Paper No. 48% of labour force is engaged directly with agriculture. There seems to be a paradox in the role of agriculture in economic development. As a matter of fact, during the fifties, it contributed around half of the national output. Agriculture is not only the largest and most important sector of the Indian economy, but also the most backward one. On the other hand, low agricultural prices are bad for the farmers because they reduce their incomes and therefore their buying power to purchase industrial goods. During eighties and nineties, a further fall in this proportion took place. To quote them, “With current initial conditions and in the present low-growth world environment, an “Agricultural Development-Led Industrialisation (ADLI) Strategy” leads to higher rates of economic growth, better income distribution, more rapid industrialisation and a stronger balance of payments than continuation of purely export-led growth strategy. A majority of poor people live in rural areas. Abellanosa and Pava, (1987) defined the term agriculture in relation to crop farming and livestock farming as the art and science of growing plants and other crops and the raising of animals for food, other human needs, or economic gain . Thus development of agriculture sector is … State of farmers in the country. The traditional and earlier approaches proposed by development economists like Lewis, Fie and Ranis, and so on highlighted the important roles of agriculture sector in the economic development of any country (Vogel, 1994). A CASE STUDY OF OREDO LOCAL GOVERNMENT AREA. Agriculture plays a vital role in the economic development of Pakistan. Even after 60 years of independence around 40% of population in the rural areas of India lives below the poverty line and a majority of them consists of small and marginal farmers, landless agricultural labourers, Scheduled Casts and Tribes. Development of banking sector: Agriculture has also contributed a great role toward the development of banking sector. As the government realized the importance of agriculture, it takes steps to improve the productivity of crops by providing the credit facilities to the farmers at low interest rates. Therefore, the role of agriculture for the development of an economy may be stated as below: 1. As of result, the economy will reach a stationary state. With higher agricultural prices the farmers, according to this view, produce and supply less agricultural output. Role of Agriculture in Economic Development: ADVERTISEMENTS: The agriculture sector is the backbone of an economy which provides the basic ingredients to mankind and now raw material for industrialisation. ROLE OF AGRICULTURE IN INDIAN ECONOMY 2020: India as a predominantly agricultural country attributes a serious share of its overall development to the agriculture sector. This report is one in the series of background studies prepared for the 2001 update of the World Since taxing agriculture is a State subject, no State has levied agricultural holding tax or agricultural income tax because no party can turn farmers who are voters against it. The empirical evidence now clearly shows that farmers respond positively to higher agricultural prices. Role of Agriculture in the Economic Development of a Country 1. Besides, the farmers who have marketable surplus of food-grains (cereals and pulses) sell them in the market from which they get money incomes which also become a source of demand for industrial goods. the role of agriculture in the development of least-developed countries and their integration into the world economy 1 executive summary 3 introduction 7 i. the present situation of agriculture 10 ii. Background: some facts In the discussion of the role of agriculture in economic development, a leading question is how agriculture contributes to economic growth, and especially to pro-poor growth. Contribution to National Income. TOS4. 11 1.6 Scope and Limitations of the Study This study is intended to examine the role of agriculture in socio-economic development, with particular reference to … Agriculture is seen as a more or less equal partner with industry and other sectors of society. With this, it helps to reduce poverty and disguised unemployment. As agricultural efficiency and production increase, a release of labor from the agricultural sector requires a reciprocal ability on the part of the industrial sector to absorb such labor. sector. Despite both agriculture as well as farmers playing a key role in the economic development of India, the state of farmers in the country is appalling. Even in case of India recently (2012-13, 2013-14) when minimum support prices (MSP) of wheat and rice were raised by the Government, farmers responded positively and not only they increased production of wheat and rice but also exported them on a large scale in the years 2012-13 and 2013-14. If with industrial development, productivity of agriculture does not rise sufficiently and imports of food-grains are not possible due to non-availability of sufficient foreign exchange, the terms of trade will turn heavily against the industrial sector and as several models of growth point out the growth process will eventually stop because industrial production will become unprofitable. Agriculture and Its Economic Development Agriculture has always played a pivotal role in shaping the economy of countries. Over the years 1921-2001, the size of labour force dependent on agriculture had more than doubled. Food production and similar agricultural businesses have the potential to feed a nation, supply jobs, and contribute to the tax base of local and national governments. Importance of agriculture in the national economy is indicated by many facts. However, the empirical evidence shows that far from withdrawing surplus labour from agriculture, the modern industrial sector being highly capital-intensive generates very little employment opportunities which are not enough even to employ all the openly unemployed persons in the urban areas. Irma Adelman and Jean Waelbroeck” have put forward a strategy called ‘Agricultural Development- Led Industrialisation Strategy’ simply called ADLI Strategy in which they have argued for allocating a greater share of investments to the agricultural sector to improve agricultural productivity and achieve a more rapid growth. State of farmers in the country. As a matter of fact, why Britain was the first country to have industrial revolution is the fact that Britain had an agricultural revolution. Agricultural economists emphasize the important role of the agricultural sector in economic development. The widespread diffusion of new high-yielding technology in the rural economy of India will raise agricultural productivity as well as employment. It is the backbone of our economic system. In the case of groundnuts, India stands first in the world, for rice production it ranks second and in the case of tobacco it occupies third rank in the world. Only a strong and efficient agricultural sector can feed the growing population of a country, provide employment, play vital role in the foreign trade and earning of foreign exchange and give a strong base to the industri… Share Your Word File The government can also extract savings from the farmers by taxing the agricultural sector. Article shared by. The smaller the wages of labour, the lower will be the cost of industrial sector which will bring large profits to the industrialists which can be ploughed back for further industrial development and capital accumulation. 2.Market contribution i.e., providing the market for producer goods and consumer goods produced in the non-agricultural sector. According to World Development Report of the year 1979, “a stagnant rural economy with low purchasing power holds back industrial growth in many developing countries.”. Introduction Those of us who preach the gospel of agriculture with evangelical zeal find the text compelling and convincing. In the earlier stages of development when urban sector is very small and markets for exports have not yet been found, agricultural sector of developing countries is a major source of demand or market for industrial products. Agriculture has been the major source of livelihood in the Indian economy. It is here worth mentioning the concept of marketable surplus. But most developing countries do not have necessary foreign exchange earnings to import food-grains to feed their people and therefore have to rely on their own agriculture to produce enough food to meet the consumption needs of their people. Agriculture contributes even now a major share of the national income in India. Share Your PPT File, Role of Agriculture in Economic Development, Ricardo’s Theory of Economic Development | Economics. The Role of Agriculture in Development by Douglas Gollin, Stephen Parente and Richard Rogerson. Agriculture and Its Economic Development Agriculture has always played a pivotal role in shaping the economy of countries. In India it has been found that whenever there is sluggish or negative agricultural growth, there is stagnation in the industrial sector due to lack of demand for the industrial products. Six out of every ten persons in India... 3. By doing so, agricultural productivity will be increased on the one hand and on the other, new industrial units would be set up with the use of surplus labour. THE ROLE OF AGRICULTURE IN THE DEVELOPMENT OF LDCS 3 THE ROLE OF AGRICULTURE IN THE DEVELOPMENT OF LEAST-DEVELOPED COUNTRIES AND THEIR INTEGRATION INTO THE WORLD ECONOMY EXECUTIVE SUMMARY This paper examines the role of the agricultural sector in poverty alleviation and in the sustainable economic growth and development of 11 1.6 Scope and Limitations of the Study This study is intended to examine the role of agriculture in socio-economic development, with particular reference to … Product contribution 2. Role of Agriculture Sector in Economic Development of a Developing Country: The development of any poor and backward economy can be brought by promoting its agri. The increase in agricultural productivity and production causes increase in the home market for manufactured goods and services and thereby speeds up rate of economic development. In the developed world, agriculture has long ceased to be considered as the major economic sector and its role as a contributor to the national economic growth is … The role of agriculture in economic development is crucial because a majority of the population of developing countries make their living from agriculture. Cotton and Jute textile industries, sugar, vanaspathi and plantations - all these depend on agriculture. Agriculture also provides fodder to sustain livestock whose number runs to several crores. In India land revenue from agriculture has been a negligible source of State income. The marketable surplus is the difference between the agricultural output and the subsistence needs of the farmers producing it. For example, agriculture is the main support for India's transport system, since railways and roadways secure bulk of their business from the movement of goods. Abolition of serfdom and enclosure movement led to the significant increase in agricultural productivity which enabled agriculture to provide enough food to feed its increasing industrial workforce. It is evident from the following arguments: (1) Availability Of Food: In case of UDCs the production of food stuff plays an important role. That is why agriculture development in Indonesia can not be separated from rural development at large. Role of Agriculture in Economic Growth: Economic development is a process whereby the real national income of a country increases over a long period of time. In Japan a tax on agriculture was levied to mobilise savings for capital accumulation. Therefore, in India agriculture remains under taxed. Role of agriculture in economic development of Kenya Agriculture is the art and business of cultivating soil, producing crops and raising livestock. The importance of agriculture in the national economy can be best explained by considering the role of agriculture under the following heads. Factor Contribution: Another contribution of agriculture to economic development is that it provides … Some countries such as Malaysia, South Saudi Arabia have large exports based on natural resources which enable them to earn enough foreign exchange to import their food requirements for their people. The lack of foreign exchange acts as a great constraint on the growth process. The traditional and earlier approaches proposed by development economists like Lewis, Fie and Ranis, and so on highlighted the important roles of agriculture sector in the economic development of any country (Vogel, 1994). The purpose of this research is to identify the role of agriculture in the economic development of Edo State: a case study of Oredo Local Government Area. the role of agriculture in economic growth and development. Since it fulfills the basic necessities of the people, all nations across the globe make special provision to improve the productivity. Agricultural sector plays a strategic role in the process of economic development of a country. 3.Factor contribution i.e., making available labour and capital to the non-agricultural sector and. Agricultural growth raises the productivities and incomes of small and marginal farmers, and raises and employment and wages of agricultural workers. Role of Agriculture in Economic Planning The prospect of planning in India also depends much on agricultural sector. Therefore, if agricultural growth is sluggish, these agro-based industries would not get their required supplies of raw materials. “Agriculture is the of process of cultivation of land or soil for production purpose”. external economic environment: opportunities and challenges 43 iii. Agriculture occupies a very important place in the economic life our country. The... 2. Content Guidelines 2. According to Ragnar Nurkse, surplus population in agriculture should be removed and used in newly started industries and public works in rural areas. During 2002-03, it stood at about 25 percent. Agriculture can also be a major source of saving or capital for industrial growth of developing countries. Since agriculture contributes about 25 percent of the national income, this sector is the primary source of savings and hence capital formation for the economy. • The process is dynamic involving changes in structure and procedures of doing activities in the … Agriculture plays a vital role in economic development of developing countries. Besides, to increase employment in agriculture, lands reforms such as tenancy reforms and distribution of land through imposition of ceilings on landholdings should be effectively implemented as small farmers employ more labour, have larger cropping intensity and higher productivity. A large proportion of the In the initial stages of development when industrial sector has not yet developed much, agriculture is a source of foreign exchange earnings from its exports of primary goods. Published in volume 92, issue 2, pages 160-164 of American Economic Review, May 2002 In the discussion of the role of agriculture in economic development, a leading questio n is how agriculture contributes to economi c growth, and especially to pro-poor growth. On historical, theoretical and empirical grounds, there is little controversy regarding the role of agriculture in poverty reduction in Africa. Foreign exchange contribution 5. However, with the expansion of branches of nationalised banks farmers are voluntarily depositing their savings in these banks, which the banks can lend for industrial growth of the country. Chapter one consists of the introduction aspect of the project. Contribution of Agriculture to Employment Generation. More than a billion persons are now living in villages and are engaged primarily in agriculture. For many low-income developing countries, agriculture is the largest sector in the economy and in total employment. The use of these inputs of high-yielding technology enables the farmers to adopt multiple cropping which has a large employment potential. In fact, there is interrelationship between agriculture and industries. The main reasons for the favourable result of ADLI strategy are that: (1) The strong domestic linkages of agriculture with manufacturing, through both the demand and the input sides, lead to high domestic demand multipliers for agricultural output; (2) Investment in agriculture is less import- intensive and more labour-intensive than investment in industry and so is agricultural production; (3) The rate of return to investment in agriculture is high, equal or be exceeding that of investment in industry. The Role of Agriculture in Development by Douglas Gollin, Stephen Parente and Richard Rogerson. The data used were collected from the statistical bulletin of the Central Bank of Nigeria and World Bank’s development indicators, and covered the … This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. If the industrial and services sectors have to grow, the food requirements of the workforce employed in them have to be met by the marketable surplus of the farmers. ROLE OF AGRICULTURE IN ECONOMIC DEVELOPMENT IN NEPAL. Nevertheless, certain aspects of agriculture's role Thus, it is through increase in agricultural productivity as a result of green revolution technology since the mid-sixties of the last century that has been used for generating agricultural marketable surplus for industrial growth by the developing countries of South-East Asia by using cheap labour from agriculture. THE ROLE OF AGRICULTURE IN THE ECONOMIC DEVELOPMENT OF EDO STATE. It further argues that whereas in the past, agriculture was often viewed as the passive partner in the development process, it is now typically regarded as an active and co-equal partner with the industrial sector. The fortunes of the economy are, even now, dependent on the course of agricultural production. standard economic indicators to explain the relative importance of agriculture. that characterize the agricultural sector during the course of develop-. The concepts of economic growth and economic development are often used in-terchangeably, and the distinction be-tween the two is very vague. Developing nations can dramatically reduce poverty through efforts to stimulate agricultural business growth. Agricultural growth has direct impact on poverty eradication. Besides, small farmers can deposit their small savings in banks operating in the rural areas and then these banks can provide loans to the industrialists for investment purposes. The role of agriculture ineconomic development Economic development redefined• Economic development is the process by which a population increases the efficiency in which it provides desired goods and services thereby increasing the per capita levels of various social and economic indicators. The role of agriculture in economic development is multifaceted. Market contribution  4. Because agriculture is a large part of most developing economies, both in terms of employment and share of GDP, agricultural economists have been at the forefront of empirical research on development economics, contributing to our understanding of agriculture's role in economic development, economic growth and structural transformation. These are: 1.Product contribution i.e., making available food and raw materials. While there is consensus on the importance of agriculture in poverty reduction, disagreement still exists on whether agriculture can be an engine for growth and economic transformation and how to develop agriculture most effectively to realize its role in economic development. The purpose of this research is to identify the role of agriculture in the economic development of Edo State: a case study of Oredo Local Government Area. That is, according to this viewpoint, there was backward bending supply curve of agricultural output. For economic development, it is necessary to minimise political as well as social tensions. Since it fulfills the basic necessities of the people, all nations across the globe make special provision to improve the productivity. Branding itself as the “giant of Africa”, the country now needs to prove its potential by raising its standards to a level with other fast developing economies of the world. ABSTRACT. Agriculture is the backbone of the economic system of a given country. 1 Large size often matters in explaining the role of agriculture. In less developed economies, agriculture is more geared toward the provision of food and social security. The role that agriculture plays in society changes during the process of economic development. Agriculture plays a very vital role for economy of Pakistan and its development. The people are able to get the basic necessities of life such as a good sanitary system, clean water, electricity, provision of health and educational facilities etc. Privacy Policy3. The Role of Agriculture in Economic Development and Poverty Reduction An Empirical and Conceptual Foundation Alexander Sarris Work in Progress The World Bank Rural Development Family. Agriculture plays a critical role in the entire life of a given economy. Agriculture is a major source of food of population of Pakistan. Many of our small scale and cottage industries like handloom weavings, rice husking, coir, khadi etc., depend upon agriculture for their raw materials. Role of Agriculture in Economic Development 1. It follows from above that rapidly growing agricultural sector is a precondition for rapid industrial growth. Agriculture has been the major source of livelihood in the Indian economy. Welcome to EconomicsDiscussion.net! The main source of livelihood is agriculture. It is the source of national income and employment (48% of the labor force) is directly engaged with agriculture. The role of agriculture in economic development is multifaceted. We explain below the role of agriculture in detail and point out in what ways agriculture can contribute to economic growth of a country. Despite both agriculture as well as farmers playing a key role in the economic development of India, the state of farmers in the country is appalling. One of these material resources includes a vast array of land that is arable. So it is the main source of living or income of the major part of economy population. Thus, in India as in the Second and Third Five Year Plans (period 1956-1966), agriculture was relatively neglected in allocation of investment resources, the growth process came to a halt as even food could be imported and also in the absence of availability of enough foreign exchange earnings, it experienced balance of payments problems and it became difficult to import even necessary inputs for industrial growth. The agricultural prices should also not be too low so as to provide incentives to the farmers to increase agricultural production. The developing countries in the early stages of economic development often experience shortage of foreign exchange or what has been called ‘foreign exchange gap’ to meet the requirements of imports for industrial development. Thus agriculture can make significant contribution to economic development by earning foreign exchange required for importing industrial raw materials and capital goods required for expanding industries. There seems to be a paradox in the role of agriculture in economic development. Raj recommended ‘Agricultural Holding Tax’ to mobilise savings from agriculture for economic development. In case the majority of the people have to be kindled with the hopes of prosperity, this can be attained with the help of agricultural progress. In Lewis “Model of Development with Unlimited, Supplies of Labour,” mobilisation of surplus labour (i.e., disguisedly unemployed) in agriculture for expansion of modern industrial sector and capital accumulation has to be made for employment in expanding industries. Nigeria is on its way to modern development. A good crop always provides impetus towards a planned economic development of the country by creating a better business climate for the transport system, manufacturing industries, internal trade etc. Disclaimer Copyright, Share Your Knowledge Some of the major role of agriculture in economic development of a country are as follows: Agricultural sector plays a strategic role in the process of economic development of a country. Agriculture provides employment and work to an overwhelming majority of the Indian masses. In industrially advanced countries like U.K., U.S.A., etc, the number of people dependent on agriculture is very low as compared to India. This marketable surplus must be extracted from the agricultural population to be used for the expansion of the industrial sector. Agricultural economics plays a role in the economics of development, for a continuous level of farm surplus is one of the wellsprings of technological and commercial growth. It has already made a significant contribution to the economic prosperity of advanced countries and its role in the economic development of less developed countries is of vital importance. Most of the developing countries depend on their own agriculture to provide food to be consumed by their population. Lower agricultural prices are good for industry as it would get cheaper food and raw material, which would lower its cost of production and raise its profitability. This has however implication for pricing of agricultural products relative to the industrial goods, that is, terms of trade between agriculture and industry. If the increase in real national income is greater than the increase in population growth, the real per capita income would increase. That the farmers respond positively to incentive prices is also shown by the fact that the farmers in India and other developing countries adopted the green revolution technology (i.e., use of HYV of seeds along with fertilizers and pesticides) when higher prices of food-grains were offered to them as incentives. Besides, lower agricultural prices would serve as disincentive to raise agricultural productivity. H1: agriculture play significance role toward improving socio- economic development of Zaria Local Government. Besides, according to Rostow’s model of economic growth, prior to take-off stage of economic development there must be agricultural revolution. Contribution to National Income: The lessons drawn from the economic history of many advanced countries tell us that agricultural prosperity contributed considerably in fostering economic advancement. Low so as to its proper role in development by Douglas Gollin, Stephen Parente Richard. 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Lower food prices and keeps inflation under control which also contribute to lowering poverty. External economic environment: opportunities and challenges 43 iii thus whatever the development of Kenya agriculture is only! Needs of the Indian economy seems to be a source of livelihood in the economy of India will agricultural... Development strategy a particular country adopts, the real per capita income would.... On agriculture had more than a billion persons are now living in villages, seventy! Is plagued by evils such as underemployment, disguised unemployment and low productivity employment allied agro-industries of special.! To realise the full employment potential of agricultural growth is pursued given country other,.