Agriculture in Development: A Coalitional Analysis

In interpreting these results, we can make use of several characteristics of the economies of the developing nations. The first is that consumers in poor nations spend a very large portion of their incomes on food — in many cases, in excess of 50 to 60 percent. The second is that specialization in the developing economies appears to have proceeded much further in the ‘modern sector’ — i.e. in manufacturing — than it has in agriculture. Thus, in the manufacturing sector, there are firms which specialize in the production of such items as clothing, bicycles, soap, and toothpaste; but in agriculture, ‘firms’ often amount to peasant farmers who grow a full range of crops with which to meet their subsistence needs and who simply market their surplus production. In other words, agricultural producers supply ‘food’ as opposed to ‘wheat,’ ‘lettuce,’ ‘tomatoes,’ or what not. In terms of our model, these considerations imply that agricultural producers can be assigned very high ‘α's.’ In the process of coalition formation, they therefore constitute relatively unattractive partners; for should they be granted a price rise, this would be very costly to all other members of the coalition. Persons seeking to influence the state so as to secure higher real incomes therefore have a strong incentive to exclude agricultural producers from the policy determining coalitions in preference to other partners who possess lower ‘α's.’ Under such circumstances, our model suggests, an equilibrium coalition does exist and food producers are unlikely to be members of it. Such a coalition would maximize the level of the guaranteed income of all prospective members; it would represent the best possible outcome of their search for lobbying partners, and there are therefore strong incentives for it to form. Moreover, our model suggests that such a coalition would be composed of persons who draw their incomes from the production of goods characterized by the lower range of ‘α's, i.e., by ‘α's’ which(This abstract was borrowed from another version of this item.)