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Farm and Non-farm Sector Linkages and Future of Agriculture

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  • Dev, S. Mahendra

Abstract

Agriculture development is crucial for raising incomes of population dependent on agriculture and for growth of non-agriculture. There are significant linkages between farm and non-farm sectors. The concept of ‘sectoral linkages’ was first introduced by Hirschman’s (1958) theory of ‘unbalanced growth’. He argued that the expansion of sectors with larger linkage measures can increase growth faster through their interdependence with other sectors than by alternative means. It is also pointed out that agriculture could not become a leading sector due to its weak backward linkages. In contrast to Hirschman’s views, Kalecki (1960) and Kuznets (1968) emphasise that agricultural development is essential for improving industrialisation. Lewis (1954) discusses the role of terms of trade in the context of agriculture-industrial linkages. According to him, increase in terms of trade in agriculture would reduce profits for industry. In contrast, Kaldor (1967) emphasises that rise in terms of trade for agriculture would improve demand for industrialisation. Johsnston and Mellor (1961) and Mellor (1976) discuss the importance of agriculture on nonagricultural sector. Later, studies by Mellor (1976), Liedholm and Kilby (1989), Ranis and Stewart (1993) stressed the importance of rural non-farm sector. Recent book by McMillan et al. (2017) examined structural change and focused on change in terms of shifting from low-productive to high-productive sectors and change in terms of raising human capital.

Suggested Citation

  • Dev, S. Mahendra, 2018. "Farm and Non-farm Sector Linkages and Future of Agriculture," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 73(01), January.
    • Handle: RePEc:ags:inijae:343361
    DOI: 10.22004/ag.econ.343361
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    References listed on IDEAS

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    1. Rao, N. Chandrasekhara & Sutradhar, Rajib & Reardon, Thomas, 2017. "Disruptive Innovations in Food Value Chains and Small Farmers in India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 72(01), March.
    2. Datt,Gaurav & Ravallion,Martin & Murgai,Rinku, 2016. "Growth, urbanization, and poverty reduction in India," Policy Research Working Paper Series 7568, The World Bank.
    3. Saha, Partha & Verick, Sher., 2016. "State of rural labour markets in India," ILO Working Papers 994927490402676, International Labour Organization.
    4. Margaret McMillan & Dani Rodrik & Claudia Sepulveda, 2017. "Structural Change, Fundamentals and Growth: A Framework and Case Studies," NBER Working Papers 23378, National Bureau of Economic Research, Inc.
    5. Carl Liedholm & Peter Kilby, 1989. "The Role of Nonfarm Activities in the Rural Economy," International Economic Association Series, in: Jeffrey G. Williamson & Vadiraj R. Panchamukhi (ed.), The Balance between Industry and Agriculture in Economic Development, chapter 16, pages 340-366, Palgrave Macmillan.
    6. Himanshu, & Jha, Praveen & Rodgers, Gerry (ed.), 2016. "The Changing Village in India: Insights from Longitudinal Research," OUP Catalogue, Oxford University Press, number 9780199461868.
    7. Ranis, Gustav & Stewart, Frances, 1993. "Rural nonagricultural activities in development : Theory and application," Journal of Development Economics, Elsevier, vol. 40(1), pages 75-101, February.
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