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The Role Of Agriculture In Economic Development: Visible And Invisible Surplus Transfers

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  • Winters, Paul C.
  • de Janvry, Alain
  • Sadoulet, Elisabeth
  • Stamoulis, Kostas G.

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 rigorously measure 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

  • Winters, Paul C. & de Janvry, Alain & Sadoulet, Elisabeth & Stamoulis, Kostas G., 1997. "The Role Of Agriculture In Economic Development: Visible And Invisible Surplus Transfers," CUDARE Working Papers 25086, University of California, Berkeley, Department of Agricultural and Resource Economics.
  • Handle: RePEc:ags:ucbecw:25086
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    1. Quizon, Jaime & Binswanger, Hans, 1986. "Modeling the Impact of Agricultural Growth and Government Policy on Income Distribution in India," World Bank Economic Review, World Bank Group, vol. 1(1), pages 103-148, September.
    2. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," World Bank Economic Review, World Bank Group, vol. 2(3), pages 255-271, September.
    3. Lele, Uma & Mellor, John W, 1981. "Technological Change, Distributive Bias and Labor Transfer in a Two-Sector Economy," Oxford Economic Papers, Oxford University Press, vol. 33(3), pages 426-441, November.
    4. Per Pinstrup-Andersen & Norha Ruiz de LondoƱo & Edward Hoover, 1976. "The Impact of Increasing Food Supply on Human Nutrition: Implications for Commodity Priorities in Agricultural Research and Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(2), pages 133-142.
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    Keywords

    International Development;

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