The dependence of developing economies on agriculture condemns them to remaining poor

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Development Economics

“The dependence of developing economies on agriculture condemns them to remaining poor”

UNO’s latest research confirm the above view when an article published the figures showing that the 24 percent of GDP worldwide is agricultural-related.

The basic economic problem which determines the fact that Maximum Growth can be achieved if a country use its resources efficiently and produce maximum output in order to achieve economic growth. But in poor countries if agricultural productivity is low, most people must work on the land to produce enough food for the population. Few people are available for work in other activities. Therefore clearly resources are not being used carefully, as farmer themselves are not certain about the level of production they are working for. Their set targets might go wrong when crops are damaged by any reason.

There are number of reason why agriculture doesn’t bring development for all those agricultural countries who are producing million of tonnes of wheat, rice, other food commodities, minerals etc.

Poor countries in Africa, Asia and Latin America are very often subject to droughts which seriously affect crop and pasture productivity. Also in poor countries, farmers are not profit-motivated. Lack of price incentives and not getting the ‘right’ price of their commodities might discourage them for future irrigation on their land.

Lack of renewed and technological equipment is another reason of less productivity and therefore the reason for them to remain poor. Maximum output is not possible to achieve if new and more efficient agricultural tools are not available to increase the level of output. A country can achieve growth if specialising in a particular commodity, new equipment might develop the quality of their product and a country can specialise in it, which is also only possible if poor countries have adopted technological change over a few years.

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Another disadvantage of primary production like agriculture is that their real prices tend to be very volatile. A change of more than 40% in real price for agricultural commodities is not uncommon.

Also poor countries also face unfair competition from other countries especially by EU Countries. It’s been EU’s practice to subsidise their Exporters for their exports in order to boost the export and penetration of foreign exchange into EU Countries.

Therefore this might also discourage investors to diversify and invest their money into Manufacturing in poor countries, where goods can be manufactured very cheaply but can not ...

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