Agricultural productivity is the evaluation of the investments (inputs) in agronomic practices against the returns (output) of the same venture, usually expressed as a ratio. Therefore, output is the quantified product afterevery farming season. While the respective goodsare articulated by weight, it has been attributed as challenging to establish the overall quantity which encompasses the agricultural output. Itis thus conveyed in terms of the general market value of the final agricultural products manufactured at the end of the farming season, usually on an annual basis. It has been recognized that agricultural output and productivity influence the development of the industrial base. The paper will,thus, assess different case studies reflecting on the reasons and ways through which the agricultural output and growth aid industrialization.
Reasons Why Agricultural Output and Productivity Growth Facilitates Industrialization
Productivity in the agricultural sector is one of the factors that have led to a rapid transition out of poverty. According to Timmer, a high productivity in agriculture guarantees improved industrialization and urbanization through increased labour, savings and food brought about by agriculture (2014, pg13).
First, to attain efficient transport and commercialization of the agricultural yields, the notionshavehelped the growth of the transport and communication sphereswith the help of the state investments (Timmer and Akkus, 2008). Therefore, in attempts to set accessibility, the authorities have developed transport and communication by constructing passable road networks in various countries. According to Timmer, strives for food security in Asian countries such as Vietnam has greatly assisted in the creation of the nation’s industrial base(2014). Within the last two centuries, Asian states like Thailand have made it a political guideline to affect rice farming as a way to attain food security and eradicate the acute poverty that has been ravaging the region. In the process, the country has undergone a rapid structural transformation in both commercial and processing industry sectors. Rice farming has been practiced in both small and large-scale enterprises, which is enough to sustain the domestic population and a surplus for export (Timmer 2014, pg. 18). The cereal for export purposes has necessitated the need for transporting facilities to ferry the agricultural produce to the required markets, both internally and overseas. Therefore, the government has constructed roads, railways, and water and air transport sections for efficient transportation.
Second, agricultural output and productivity have facilitated the growth of processingfieldstoimprove the quality of goods effectively. Timmer highlights that the increasing investments in rice farming have transformed the practices in Asia from subsistence farming to commercial cultivation(2014, pg 18). In this way, the need for processing and packing plants has arisen in ordertoboost the qualityof rice. Since the demand for such services has continually been identified by potential entrepreneurs, milling and packing factories have developed in close proximity to rice farming areas. The Asian locals have,therefore, been enjoying the employment opportunities in the plants, further boosting the industries. Timmer postulates that in the years 2010-2011, the total African national frugality improved by an estimated margin of 5.3% percent(2014, pg18). Through the exportation of agricultural raw-materials like cloves, tea,and coffee, the locals have generated extra funds for developing the industries to process materials into finished goods. Due to the continuous transportation of raw commodities, the beverage and food spheres have been sustained, thus, maintaining competitiveness in international markets.
Third, agricultural output and productivity have requested the need to develop agro-based industries to gain access to highly required farm inputs. Because of the progress in the two notions, the advancement of the farm input industries majoring in the production of fertilizers and pesticides have immensely grown. According to Timmer, the growth in such fields in Asia has been attributed to the arising requirement to sustain scaling rice farming and the depletion of natural farmland nutrients due to the continuous cultivation(2014). In fact, to boost the yields behold the average produce supported by such substances, professionals have embraced the input of inorganic fertilizers during the practices. Further, the increase in the farming output has necessitated the application of pest control measures on a large scale, therefore, boosting chemical industries in the region.
Fourth, agricultural productivity and output haveimproved the progress of the power industry to find a useful disposable avenue for by-products with economic value. Due to the farming practices like corn and rice cultivation, there is the manufacturing of a wide range of products such as maize and corn stalks. At times, the vegetative parts of the corn and paddy have been perceived as waste goods. Because of the growing necessity to get rid of them -and the opportunity cost implied- innovative steps to the production of biofuels have been implemented(Meier and Rauch, 2000). The availability of waste on a seasonal basis has been identified by investors as an opportunity to venture in fuel production which will aid in industry development. additionally, the availability of biofuels hasincreased competition amongestablished fossil fuel providers, thus, making the products accessible in the markets at considerably lower prices.
Fifth,the two aspectshave led to the development of water provisionswhich aid in irrigation. Irrigation is one of the most effective means of channelling water to areas which are dry. Through this, agriculturalists are able to have a constant supply of water which will eventually ensure that the level and rate of agricultural output and productivity is maintained over time (World bank, 2008 pg.70) Therefore, projects like the Ghana Water Sector reform have been created to sustain andmaintain irrigation for agricultural production (Bates,1981). Moreover, there are various water provision plants like the Jordan, Aman,andArgentina Water Supply Services which were created to support the activities in the country.
Sixth, agricultural output and productivity have facilitated the development of the financial industry such as banks and other financial institutions. Tobolster the agricultural output, the professionals have to invest monetary resources/capital. Furthermore, financing such activities is continually becoming more and more expensive every year. Therefore, farmers have turned to lending institutions to supplement their resources for investment. The growth in loan subscribers has boosted the commercial bank credit capacity,and the interests are resulting from loan repayment have raised in the same establishments. Moreover, the resulting funds from the agricultural productionare mainly banked by farmers in the institutions as savings, therefore boosting cash deposits. International financial facilities willingly extend grants and loans to agriculturally productive states thanks to the availability of the income generating processes which assure the creditworthiness for subscribers.
How Agricultural Productivity and Output Facilitates Industrialization
Agricultural productivity and output contribute toindustrialization in diverse ways. First,theyhave promoted the automobile manufacturing spheres. Due to the need to ensure that the amount of agricultural output exceeds the investments and the limited supply of labour, farmers have found it necessary to employ machinery that would facilitate fast and easy production of agricultural produce in order to meet the demand and supply curve.(Lewis, 1954). The demand for equipment for purposes such as spraying, harvesting,and cultivation has arisen, increasing investment opportunities in the sector. For instance, the South Asian region has embraced farming on a large-scale, which in turn has propelled the automobile industry in Japan (Timmer, 1988). In other countries like Canada and New Zealand, the shortages in labour supply continually threaten to decrease the agricultural yields in the 1980s, which further encouraged the use of machinery in the agricultural sector.
Second, agricultural productivity and output promote industrialization by attracting foreign investors. When the market value of thegoods and quality is maintained at a constant level over a period of time, potential investors identify the promising areas in which they would invest into. As a result, the investors will seek to plough intothe countries to provide necessary services, for instance, insurance and investment consultancy. In most instances, investors target regions that have a potential to grow but lack the necessary resources to spearhead this development.
Third, agricultural productivity in processes like cattle rearing has aided the industrialization in several ways. For instance milk is one of the major ingredients in the baking industry. Moreover, meat processing and canning industries have been established as a result of cattle rearing. For instance, the shift from the agricultural activities by Argentina in the mid-1900s caused an economic turmoil that oversaw the collapse of the industrialsector (Lindert, 1991). However, after reinstating the agriculture as the primary economic activity for income generation within the country, the nation has gradually healed from the previous crisis. The textile and leather industry has also further developed due to the fact that cow, goat and sheep skin are the major raw materials for these industries. Consequently,the growth of these industries has led to a direct growth of theclothing industry.
Fourth, increased foreign exchange from increased agricultural exports led to availability of funds which was used for acquiring inputs for industries. Additionally, the high agricultural income helped ingenerating savings which were later used for investments necessary for industrialization. This phenomenon is evident form Japan’s transition to industrial development during the early 20th century. The transition was made possible by its success in mobilizing its agricultural savings (World Bank 1987, pg. 50). According to statistics 27% of Japan’s non-agricultural sector was financed by the agricultural sector.
Fifth, through augmenting the agricultural manufacturing and output for the aesthetic items, the tourism field has been advanced tremendously. Floriculture has been one of the major sections of agriculture for the products of creative value (Wuyts, 2011). Although they may be harvested and exported, it is the beauty in their natural habitats that appeals the most to the viewers. Nevertheless, the areas around which floriculture is currently practiced have been set up to accommodate tourism activities, photographing and other recreational events, boosting the industry.
Sixth, from an increase in agricultural, output and input, higher rural income raises the demand for other goods as well as that of manufactures. However, due to the fact that when income raises the share of food in total in expenditure declines, a rise in the rural income leads to a subsequent rise in manufactures (World Bank 1987, pg. 50)
As presented in paper, the agricultural productivity and output facilitate industrialization to gain access to various provisions like finances, transport means and necessary farm inputs. Moreover, the arising demand for processing and packaging of products like paddy and corn has necessitated the establishment of plants near the cultivation areas. Agricultural productivity and output have also enhanced the industrialization through the attraction of foreign investors within the areas. Moreover, the textile and construction industries have been greatly influenced by the availability of the output like raw materials for the manufacturing of clothes and erection of structures. It is,thus, clear that increasing agricultural productivity and output directly impact the growth of industries around the globe.
Bates, R., 1981.States and markets in tropical Africa: the political basis of agricultural policy. Berkeley: University of California Press.
Byers, T., 2003. Agriculture and development. In Rethinking Development Economics(pp. 235-253). London: Anthem.
Ghosh, J., 2005. Michael Kalecki and the economics of development. In The Pioneers of Development Economics: Great Economists on Development (pp. 109-121). London: Zed Books.
Kalecki, M., 1955. The problem of financing of economic development. Indian Economic Review, 2(3), pp.1-22.
Lewis, W.A., 1954. Economic development with unlimited supplies of labour. The Manchester School, 22(2), pp.139-191.
Lindert, P., 1991. Historical patterns of agricultural policy. In Agriculture and the State: Growth, Employment, and Poverty in Developing Countries (pp.29-83).Ithaca, NY: Cornell University Press
Meier, G. and Rauch, J., 2000. Leading issues in economic development.In II.4. Income Distribution, Market Size, and Industrialization Section (pp. 111-113).Oxford: Oxford University Press.
Polanyi Levitt, K., 2005. Raul Prebisch and Arthur Lewis: the two basic dualities if development. In The Pioneers of Development Economics: Great Economists on Development (pp. 56-71). London: Zed Books.
Storm, S., 2015. Structural change. Development and Change, 46(4), pp.666-699.
Timmer, C.P. and Akkus, S., 2008. The structural transformation as a pathway out of poverty: analytics, empirics and politics.[Online] Available at: <https://www.files.ethz.ch/isn/91306/wp150.pdf> Accessed 28 Feb 2019.
Timmer, C.P., 1988. The agricultural transformation. In Handbook of Development Economics (pp. 275-331). Amsterdam: NorthHolland.
Timmer, C.P., 2010. Rice and the structural transformation. Los Baños: International Rice Research Institute (IRRI).
Timmer, C.P., 2014.Managing structural transformation: a political economy approach. Helsinki: WIDER.
World Bank, 2008.The political economy of policy reform: issues and implications for policy dialogue and development operations.Washington DC: World Bank.
Rajapatirana, S., Ansu, Y., Juncker, T., MacBean, A., Nam, C.H., Nehru, V. and Shepherd, G., 1987. World development report 1987.
Wuyts, M.E., 2011. The working poor: a macro perspective. London: International Institute of Social Studies (ISS).
Do you need high quality Custom Essay Writing Services?