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Abstract
In many developing countries, a high proportion of the population resides and works in
rural areas. Agriculture is the dominant sector in rural areas and has the greatest concentration
of poverty: landless workers, small tenant farmers, and small farm owners. Thus, any
development strategy that is directed towards increasing employment and alleviating a
country's hunger must concentrate on sustainable agricultural growth.
Historically, economic development in most countries has been based on exploitation of
natural resources, particularly land resources. Soil erosion and land degradation have been
serious worldwide. Due to reasons such as high population pressure on land and limited fossil
energy supplies, land degradation is generally more serious in the developing world. Empirical
studies show that soil erosion and degradation of agricultural land not only decrease
the land productivity but they can also result in major downstream or off-site damage which
may be several times that of on-site damage.
In promoting industrialization, governments of many developing countries adopt a package
of price and other policies that reduce agricultural production incentives and encourage a
flow of resources out of agriculture. Increasing evidence shows that these policies cause a
substantial efficiency or social welfare loss, and a great loss in foreign exchange earnings. In
addition, a World Bank study on the effect of price distortions on economic growth rates
concluded that neither rich resource endowments, nor a high stage of economic development,
nor privatization are able to make up the adverse effects caused by high price distortions.
This analysis is primarily concerned with identifying the factors that determine the
agricultural production growth rate and in testing the effects these factors have on agricultural
growth in developing countries. Specifically, this study involves statistical estimation of
an aggregate agricultural growth function based on cross-country data for 28 developingcountries. Special attention is devoted to land degradation and agricultural pricing policy,
and to the policy implications resulting from the effects these variables have on agricultural
and food production growth.
The overall results of this study show that price distortions in the economy and land
degradation had statistically significant negative impacts while the change in arable and
permanent land was positively related to the growth of agricultural production and food
production in 28 developing countries from 1971 to 1980. These results emphasize the
importance of 'getting prices right' and implementation of sustainable land and water
management practices if future growth in food and agricultural output is to be realized and
sustained in developing countries.