The Nature of Agriculture's Contributions to Economic Development

Abstract

In the burgeoning literature on economic development there has been considerable discussion of the relative importance of agricultural vs. industrial development. Few attempts have been made, however, to examine in detail the nature of agriculture's contributions to the process of economic growth. In particular, it seems desirable to consider more fully the inter-relationships between agricultural and industrial expansion and the extent to which agricultural development is complementary to over-all economic growth. Expansion of agricultural output requires increased inputs, and in that sense necessarily competes with other sectors of the economy. Historical experience and theoretical considerations suggest, however, that the optimum approach to increasing farm output and productivity in an underdeveloped country is likely to entail only modest demands on the critically scarce resources indispensable for industrial development. Since the emphasis in the present paper is on the nature of agriculture's contributions to economic advance, only a brief statement is given here of the reasons underlying the assertion that farm output and productivity can and should be increased by methods that make very limited demands on resources of high opportunity cost which are essential for industrial expansion. In virtually all underdeveloped economies agriculture is an existing industry of major proportions. On the order of 40 to 60 per cent of the national income is produced in agriculture, and some 50 to 80 per cent of the labor force is engaged in agricultural production (II, pp. 94-97, I93; 26, pp. 45-47). Although large quantities