AGRICULTURE
Economic Development in Asia
By Dowling and Valenzuela
KEY POINTS OF THIS CHAPTER
Agriculture plays a key role in the process of economic development and most of
developing countries relies on their agricultural sector to produce the food necessary to
feed their people.
Factor inputs from Agriculture
1. Labor – 70% or more of workforce in agri-based employment in poor and mediumincome economies are from agricultural sector.
2. Capital – it comes from invested savings and savings from income.
3. Foreign Exchange – in the early stages of growth, agri products serve as the
principal source of foreign exchange.
Economic Growth Models
1. Lewis-Ranis-Fei (LFR) economic model of structural change
In this model, there are essentially two main sectors of an economy: a modern
sector and a traditional sector, where the former is primarily based in cities and the
latter in the countryside.
2. Seeming Paradox – the share of agriculture valued-added in GDP and as a source
of employment consistently declines over time, as income increases.
One of the features of the successful development of the newly industrialized economies
(NIEs) and the Southeast Asian economies has been the strength and dynamism of
agriculture.
Engel’s Law – there is a low-income elasticity of demand for agricultural products; that is,
as income increases, a smaller proportion of this increase in income is spent on
agricultural products.
Three different techniques of efficiency of Traditional Agriculture
1. Cobb-Douglas Production – allocation of resources efficiently.
2. Econometric studies
3. Linear Programming Model – potential vs actual output
What causes the resistance to Innovation and Modernization of farmers?
1. Irrational behavior – conservative and backward attitude of farmers
2. Uncertainty – farmers are concerned of “What if it fails”.
3. Disincentives – farmers believed that increasing productivity will only (1) secure
gain by landlords (2) the money lender will capture all profits, (3) the government
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AGRICULTURE
Economic Development in Asia
By Dowling and Valenzuela
guaranteed price was never paid, (4) complementary inputs (fertilizers, pesticides,
assured supply of water, adequate non-usurious credit, and others was never
made available.
Developments of Microeconomics of Agriculture
1. Green Revolution – a phenomena created by the development of new higheryielding varieties of rice at IRRI.
2. Application of Fertilizers, Pesticides and Herbicides
3. Irrigation – regulation of flow of water and reducing the risk of flooding.
Factors that have not helped much
1. Farm size
2. Changes in land tenure – owner-operated farms
a. Two kinds of tenancy: a tenant gives a proportion of output to the
landlord, and land is rented to the tenant for a fixed fee.
3. Land reform
Development on Macroeconomic Agriculture
1. Macroeconomic policies towards labor-intensive technology and capitalintensive technologies.
2. Improvement on undervalued currency.
Modernization of Agriculture and Rural Welfare
1.
2.
3.
4.
5.
6.
7.
Mechanization and the Demand for Labor
Technology transfer, growth and equity
Genetic Engineering
Zero Tillage
Food prices and the linkages to energy
International Trade and Resource Transfer
Shifts Out of Primary Grain Production
The Conditions Of Agriculture Sector Among Asian Countries
According to ADB, with rising populations, increasing food prices and environmental concerns,
Asia’s agricultural sector faces a raft of challenges. The following are the things to know about
Asian agriculture:
1. More than 2.2 billion people in the region rely on agriculture for their livelihoods.
2. Rice is by far the most important crop throughout Asia – 90% of the world’s production
and consumption occur in this region.
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AGRICULTURE
Economic Development in Asia
By Dowling and Valenzuela
3. With trends showing that rice consumption decreases as income rises, many economists
has claimed rice is an inferior good.
4. Despite forecasts of famine and starvation, most Asian countries became food selfsufficient in the 1970s and 1980s thanks to the Green Revolution.
5. The stagnant declining yields of major crops such as rice and wheat can be ultimately
linked to declining investments in agriculture. Public investments in agriculture in India,
for instance, have been generally the same since 2004.
6. In 2011, it was estimated biotech crops were grown on 160 million hectares of land-making
it the fastest adopted crop technology.
7. Three of the top ten countries planting biotech crops in 2011 were in Asia, India grew more
than 10.6 million hectares of cotton, the People’s Republic of China planted 3.9 million
hectares of cotton, papaya, tomato and sweet pepper while Pakistan farmed 2.6 million
hectares of cotton.
8. Asia and the Pacific accounts for 37% of the world’s total emissions from agricultural
production, and the People’s Republic of China alone accounts for more than 18% of the
total.
9. In most Asian countries, agriculture is the biggest user of water and can reach up to 90%
of total water consumption.
10. Food and feed crop demand will nearly double in the coming 50 years. Producing meat,
milk, sugar, oils and vegetables typically requires more water than producing cereals and
a different style of water management.
11. With 25% of the world’s populations and only 7% of the world’s arable land, the agroffod
trade is a crucial sector of the People’s Republic of China’s economy - projected imports
of agrofood in the coming deaces will have significant implications within Asia.
12. ADB’s 2009 Operational Plan for Sustainable Food Security in Asia and the Pacific puts
emphasis on the integration of agricultural productivity, market connectivity and resilience
as necessary to achieve sustainable food security.
For more information on this topic, visit https://www.adb.org/features/12-things-know-2012-asian-agriculture
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AGRICULTURE
Economic Development in Asia
By Dowling and Valenzuela
The Transformation of Agriculture among Asian Countries By GDP
GDP Growth Rate, % per year
2014 2015 2016 2017 2018
2019
ADO 2019
Central Asia
Armenia
Azerbaijan
Georgia
Kazakhstan
Kyrgyz Republic
Tajikistan
Turkmenistan
Uzbekistan
2020
Update
ADO 2019
Update
5.1
3.6
2.8
4.6
4.2
4.0
6.7
10.3
8.0
3.1
3.2
1.1
2.9
1.2
3.9
6.0
6.5
7.9
2.4
0.2
-3.1
2.8
1.1
4.3
6.9
6.2
6.1
4.2
7.5
0.1
4.8
4.1
4.7
7.1
6.5
4.5
4.3
5.2
1.4
4.7
4.1
3.5
7.3
6.2
5.1
4.2
4.3
2.5
5.0
3.5
4.0
7.0
6.0
5.2
4.4
4.8
2.6
4.7
3.7
4.0
7.0
6.0
5.8
4.2
4.5
2.7
4.9
3.3
4.4
6.5
5.8
5.5
4.3
4.5
2.4
4.6
3.4
4.4
7.0
5.8
6.0
East Asia
Hong Kong, China
Mongolia
People's Republic of China
Republic of Korea
Taipei,China
6.6
2.8
7.9
7.3
3.3
4.0
6.1
2.4
2.4
6.9
2.8
0.8
6.0
2.2
1.4
6.7
2.9
1.5
6.2
3.8
5.4
6.8
3.2
3.1
6.0
3.0
6.8
6.6
2.7
2.6
5.7
2.5
6.7
6.3
2.5
2.2
5.5
0.3
6.7
6.2
2.1
2.2
5.5
2.5
6.3
6.1
2.5
2.0
5.4
1.5
6.1
6.0
2.4
2.0
South Asia
Afghanistan
Bangladesh
Bhutan
6.9
2.7
6.1
4.0
7.3
1.5
6.6
6.2
7.5
2.2
7.1
7.4
6.9
2.7
7.3
6.3
6.6
2.7
7.9
5.5
6.8
2.5
8.0
5.7
6.2
2.7
8.1
5.3
6.9
3.0
8.0
6.0
6.7
3.4
8.0
6.0
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AGRICULTURE
Economic Development in Asia
By Dowling and Valenzuela
India
Maldives
Nepal
Pakistan
Sri Lanka
7.4
7.3
6.0
4.1
5.0
8.0
2.9
3.3
4.1
5.0
8.2
7.3
0.6
4.6
4.5
7.2
6.9
8.2
5.2
3.4
6.8
7.6
6.7
5.5
3.2
7.2
6.5
6.2
3.9
3.6
6.5
6.5
7.1
3.3
2.6
7.3
6.3
6.3
3.6
3.8
7.2
6.3
6.3
2.8
3.5
Southeast Asia
Brunei Darussalam
Cambodia
Indonesia
Lao People's Democratic Republic
Malaysia
Myanmar
Philippines
Singapore
Thailand
Viet Nam
4.7
-2.5
7.1
5.0
7.6
6.0
8.0
6.1
4.1
1.0
6.0
4.7
-0.4
7.0
4.9
7.3
5.1
7.0
6.1
2.5
3.1
6.7
4.8
-2.5
7.0
5.0
7.0
4.5
5.9
6.9
3.0
3.4
6.2
5.2
1.3
7.0
5.1
6.9
5.7
6.8
6.7
3.7
4.0
6.8
5.1
0.1
7.5
5.2
6.3
4.7
6.8
6.2
3.1
4.1
7.1
4.9
1.0
7.0
5.2
6.5
4.5
6.6
6.4
2.6
3.9
6.8
4.5
1.0
7.0
5.1
6.2
4.5
6.6
6.0
0.7
3.0
6.8
5.0
1.5
6.8
5.3
6.5
4.7
6.8
6.4
2.6
3.7
6.7
4.7
1.5
6.8
5.2
6.2
4.7
6.8
6.2
1.4
3.2
6.7
The Pacific
Cook Islands
Federated States of Micronesia
Fiji
Kiribati
Marshall Islands
Nauru
Palau
Papua New Guinea
Samoa
9.6
3.2
-2.2
5.6
-0.7
-0.7
36.5
3.1
12.5
1.2
8.0
4.5
5.0
3.8
10.4
-0.6
2.8
10.4
10.5
1.7
2.7
6.0
0.9
2.5
5.1
1.8
10.4
0.6
2.0
8.1
2.4
6.8
2.7
5.4
0.3
3.6
4.0
-3.8
3.0
1.0
0.4
8.9
0.4
3.5
2.3
2.5
-2.4
1.5
-0.6
-2.2
3.5
6.0
2.7
3.2
2.3
2.3
-1.0
3.0
3.7
2.0
4.2
4.2
2.7
2.9
2.3
2.3
-0.5
-0.5
4.8
2.5
3.2
4.5
2.5
3.5
2.3
2.2
0.1
3.0
3.1
3.0
2.6
4.5
2.5
3.2
2.3
2.2
0.1
1.0
2.1
3.5
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AGRICULTURE
Economic Development in Asia
By Dowling and Valenzuela
Solomon Islands
Timor-Leste
Tonga
Tuvalu
Vanuatu
Developing Asia
Developing Asia excluding the Newly Industrialized
Economies
1.8
4.1
2.1
2.2
2.3
2.6
4.0
3.7
9.1
0.2
3.4
5.1
3.1
3.0
3.5
3.4
-3.5
2.8
3.2
4.4
3.8
-0.5
0.4
4.3
3.2
2.4
4.8
2.1
4.1
3.0
2.8
4.8
1.6
4.1
3.0
2.3
5.4
1.9
4.4
2.8
2.7
5.4
2.5
4.4
2.8
6.4
6.0
6.0
6.2
5.9
6.4
5.7
6.2
5.4
6.0
5.6
6.1
5.5
6.0
6.8
6.6
6.5
6.6
Note: Newly indiustrialized economies are Hong Kong, China; Korea, Republic of; Singapore; and Taipei,China.
The table shows annual growth rates of GDP valued at constant market price, factor cost, or basic price. GDP at market price is the
aggregation of value added by all resident producers at producers’ prices including taxes less subsidies on imports plus all nondeductible
value-added or similar taxes. Constant factor cost measures differ from market price measures in that they exclude taxes on production and
include subsidies. Basic price valuation is the factor cost plus some taxes on production, such as those on property and payroll taxes, and less
some subsidies, such as those on labor-related subsidies but not product-related subsidies. Most countries use constant market price
valuation. Pakistan, Fiji, and Maldives use basic prices. To 2015, Singapore calculated real GDP using annually reweighted chain volume
measures of GDP reference years.
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AGRICULTURE
Economic Development in Asia
By Dowling and Valenzuela
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