The Impact of Structural Adjustment on Agricultural Development in the Near East

Structural adjustment is necessary, but not sufficient for achieving sustainable long-run growth and food security at the national and household levels. The key channel of structural adjustment's impact is through improved farmer incentives. There will be fairly strong individual crop responses for those crops which were formerly heavily taxed, while the opposite is true for import-substituting (and protected) crops. The sectoral response will be lower, and although there are some important sectoral efficiency gains from reallocating land from lower to higher value crops, these gains are of a 'one for all' type. In the longer-run, growth is driven by investment and technological change, but improved incentives can encourage investment. If governments also maintain and strengthen investment in physical, human, and social infrastructure, a strong output response over the longer-run is likely. Differential impacts among rural people are also analyzed. Here too the key variable is how well supply can respond to the improved incentive environment. Such responsiveness is dependent on complementary policies.