UN points to agriculture as an escape from the "poverty trap"
(NEW YORK, October 2000) Agriculture -- often given short shrift in development planning -- can play a key and even a leading role in breaking out of the vicious cycles in which many poor countries are trapped, the authors of the UN World Economic and Social Survey 2000 contend.
The strategic importance of agriculture is often overlooked in development circles, because it was wrongly assumed that agriculture was, and would remain, a low productivity activity. But increasing productivity in agriculture is possible and offers a number of strategic advantages, this year's Survey says, in a comprehensive analysis of how countries can escape from what is known in development circles as "poverty traps".
Growth experience of the past half
century
An overview of economic growth rates in the developing countries 1950-1999 -- abstracted from the World Economic and Social Survey 2000.
In the 1980s -- known as "the lost decade" in development circles -- gross domestic product (GDP) per capita fell by a total of 6 per cent in Africa, 3 per cent in Latin America and 51 per cent in West Asia. But combined GDP per capita increased by 65 per cent in Eastern and Southern Asia during the same decade.
The overall 1980s growth of developing countries of 0.1 per cent in the 1980s improved in the 1990s to 2.3 per cent.
The experience of the last half century shows how hard it is to sustain uninterrupted growth. No developing country achieved an annual growth rate exceeding 3 per cent for 24 consecutive years -- which is the number of years required to double GDP per capita at such a growth rate.
Nevertheless, years of consistently higher economic growth have allowed some economies to double their GDP per capita in a period of 10 to 13 years: Brazil (1965-74), Indonesia (1968-80), Mauritius (1984-97), the Republic of Korea (1963-74, 1975-86 and 1987-96) and Taiwan Province of China (1963-72, 1973-84, 1985-95).
For the majority of countries, economic growth is a slow or elusive process. Out of 95 developing countries monitored by the UN Department of Economic and Social Affairs (DESA), 28 suffered an overall decline in per capita GDP between 1964 and 1999.
GDP per capita doubles in 35 years if it grows at an annual average of 2 per cent. Out of the 95 countries monitored by DESA, 74 failed to achieve this benchmark over the last 35-year period. Moreover, 39 of the 74 have per capita GDP below $1,000 (in 1995 dollars) in 1999, and 38 of these were in the same situation in 1964.
First of all, agriculture is where the poor people are -- between 70 to 95 per cent of the labour force in most developing countries works in agriculture, according to the Survey, and in general poverty rates tend to be higher in rural than in urban areas.
Additionally, a strengthened farm sector can bring down food prices and improve nutrition and labour productivity in the entire country; generate employment and heighten demand for manufactured goods and services; channel labour and capital into the development of other sectors; and earn foreign exchange.
Thus, a situation in which manufacturing operates with economies of scale is likely to lead to a poverty trap, because farmers' incomes are too low to create a demand for manufactured goods and services, the Survey says. But if technology and/or land reform stimulate farm production, the added value spurs national manufacturing and urban sectors.
Other chapters in the second part of the Survey cover the potential of institution building, education and technology, respectively, to accelerate economic and social development in the poor countries.
(The first part of this year's Survey was released in July.)
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