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The role of agriculture in economic development: Visible and invisible surplus transfers

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  • Paul Winters
  • Alain De Janvry
  • Elisabeth Sadoulet
  • Kostas Stamoulis

Abstract

The financial surplus of agriculture has been central to theories of the role of agriculture in economic development. Morrisson and Thorbecke (MT) have used a constant-price social accounting matrix (SAM) framework to measure rigorously the financial surplus of agriculture and decompose the mechanisms of surplus extraction. History and theory have, however, stressed the role of prices as an invisible transfer mechanism in addition to the visible transfers identified in the SAM framework. We extend the MT approach by defining and measuring the real surplus of agriculture and decomposing the mechanisms of surplus extraction between visible and invisible financial transfers. Using an archetype computable general equilibrium model for poor African nations, we trace the generation, transfer, and use of an agricultural surplus created by a productivity gain in agriculture. This shows that prices indeed play an overwhelmingly important role in transferring a surplus from agriculture to the benefit of the rest of the economy.

Suggested Citation

  • Paul Winters & Alain De Janvry & Elisabeth Sadoulet & Kostas Stamoulis, 1998. "The role of agriculture in economic development: Visible and invisible surplus transfers," Journal of Development Studies, Taylor & Francis Journals, vol. 34(5), pages 71-97.
  • Handle: RePEc:taf:jdevst:v:34:y:1998:i:5:p:71-97
    DOI: 10.1080/00220389808422537
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    1. Breisinger, Clemens & Diao, Xinshen & Kolavalli, Shashidhara & Al Hassan, Ramatu & Thurlow, James, 2011. "A new era of transformation in Ghana: Lessons from the past and scenarios for the future," Research reports 978-0-89629-788-3, International Food Policy Research Institute (IFPRI).
    2. Wanyama, R.N. & Mshenga, Patience M. & Orr, A. & Christie, M.E. & Simtowe, F.P., 2013. "A Gendered Analysis of the Effect of Peanut Value Addition on Household Income in Rongo and Ndhiwa Districts of Kenya," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161640, African Association of Agricultural Economists (AAAE).
    3. repec:fpr:resrep:clemensbreisinger is not listed on IDEAS
    4. Mendola, Mariapia, 2007. "Agricultural technology adoption and poverty reduction: A propensity-score matching analysis for rural Bangladesh," Food Policy, Elsevier, vol. 32(3), pages 372-393, June.
    5. Santosh K. Sahu & Sukanya Das, 2015. "Impact of Agricultural Related Technology Adoption on Poverty: A Study of Select Households in Rural India," Working Papers 2015-131, Madras School of Economics,Chennai,India.
    6. Wobst, Peter, 2002. "The impact of domestic and global trade liberalization on five Southern African countries," TMD discussion papers 92, International Food Policy Research Institute (IFPRI).
    7. Phil Simmons, 2006. "Perspectives on the 2003 and 2004 avian influenza outbreak in Bali and Lombok," Agribusiness, John Wiley & Sons, Ltd., vol. 22(4), pages 435-450.
    8. Eze, Christopher C. & Lemchi, J.I. & Ugochukwu, Albert I. & Eze, V.C. & Awulonu, C.A.O. & Okon, A.X., 2010. "Agricultural Financing Policies And Rural Development In Nigeria," 84th Annual Conference, March 29-31, 2010, Edinburgh, Scotland 91677, Agricultural Economics Society.
    9. Wainaina, Priscilla Wairimu & Tongruksawattana, Songporne & Qaim, Matin, 2014. "Improved seeds, fertilizer or natural resource management? Evidence from Kenya’s smallholder maize farmers," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182644, European Association of Agricultural Economists.
    10. Nin Pratt, Alejandro & Yu, Bingxin, 2008. "An updated look at the recovery of agricultural productivity in Sub-Saharan Africa:," IFPRI discussion papers 787, International Food Policy Research Institute (IFPRI).
    11. Clemens Breisinger & Xinshen Diao & James Thurlow & Ramatu M. Al Hassan, 2011. "Potential impacts of a green revolution in Africa—the case of Ghana," Journal of International Development, John Wiley & Sons, Ltd., vol. 23(1), pages 82-102, January.
    12. Plamen Mishev & Nedka Ivanova & Philip Kostov, 2004. "Agricultural policy options distinguishing a subsistence sub- sector in Bulgaria," Computational Economics 0409003, EconWPA.
    13. Stein Kristiansen, 2003. "Linkages and Rural Non-Farm Employment Creation: Changing Challenges and Policies in Indonesia," Working Papers 03-22, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    14. Priscilla Wainaina & Songporne Tongruksawattana & Matin Qaim, 2016. "Tradeoffs and complementarities in the adoption of improved seeds, fertilizer, and natural resource management technologies in Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 47(3), pages 351-362, May.
    15. Minten, Bart & Barrett, Christopher B., 2008. "Agricultural Technology, Productivity, and Poverty in Madagascar," World Development, Elsevier, vol. 36(5), pages 797-822, May.
    16. Ahmad Abdel-Rahman & Mohammad Safarzadeh & Michael Bottomley, 2006. "Economic growth and urbanization: A cross-section and time-series analysis of thirty-five developing countries," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(3), pages 334-348, September.
    17. repec:taf:ragrxx:v:56:y:2017:i:3:p:296-311 is not listed on IDEAS
    18. Ioanna Apostolidou & Achilleas Kontogeorgos & Anastasios Michailidis & Efstratios Loizou, 2014. "The Role of Agriculture in Economic Growth: A Comparison of Mediterranean and Northern Views in Europe," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 7(3), pages 81-102, December.
    19. Wainaina, Priscilla & Tongruksawattana, Songporne & Qaim, Matin, 2014. "Tradeoffs and Complementarities in the Adoption of Improved Seeds, Fertilizer, and Natural Resource Management Technologies in Kenya," Discussion Papers 189914, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    20. Shahid Yusuf, 2003. "Globalisation and the Challenge for Developing Countries," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(Supplemen), pages 35-72, February.
    21. Nin-Pratt, Alejandro & Johnson, Michael & Magalhaes, Eduardo & Diao, Xinshen & You, Liang & Chamberlin, Jordan, 2009. "Priorities for realizing the potential to increase agricultural productivity and growth in Western and Central Africa:," IFPRI discussion papers 876, International Food Policy Research Institute (IFPRI).
    22. Alexis Habiyaremye, 2017. "Estimating the impact of sericulture adoption on farmer income in Rwanda: an application of propensity score matching," Agrekon, Taylor & Francis Journals, vol. 56(3), pages 296-311, July.
    23. repec:oup:erevae:v:45:y:2018:i:1:p:27-56. is not listed on IDEAS

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