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Hamid Aït Amara

The objective of providing full employment for the population has profoundly affected the basic options in the development of the Algerian economy. It led to stress on the rapid expansion of industry in order to create conditions for modernizing agriculture. By creating jobs in the secondary and tertiary sectors it was hoped to gradually reduce unemployment and under-employment and to have a significant impact on the size of the agricultural population in order to reduce pressure on the land.

The stress on industry, in an initial phase of development, gave ample scope to the building-up of the sectors producing the production goods necessary for the modernization of agriculture, principally machinery, chemicals and petrochemicals. In a second phase, agriculture would become more integrated into the economy, and increase its capacity to develop its purchases from industry and its deliveries of agricultural raw materials to processing industries.

Such a pattern of autocentred development is built on the hypothesis of a growth in peasant incomes fuelled by the growth of agricultural productivity, which was necessary 1) to raise the standard of living in the rural areas, and 2) to finance agriculture's demand from industry.

To carry out such a process of growth and intensify relations between agriculture and industry requires three major conditions:

1) That the global growth of agricultural production must be more than proportional to that of the numbers employed in agriculture. In other words, there must be net growth per person employed, and this is the source of improvements in incomes, ensuring a rise in both the standard of living of agricultural workers and agriculture's demand for industrial goods.

2) It must be possible to carry through the modernization of agriculture in conditions of productivity in the employment of the factors that ensure a minimum of profitability to capital invested. In other words, agriculture must be able to pay for what it buys from industry, not artificially, through continually rising agricultural prices, or subsidies from the state, but through the advances it achieves in productivity.

3) Finally, what is produced must be at price levels sufficient to meet the needs of extended reproduction, but also compatible with consumers' purchasing power. If the opposite happens, the state is forced to act massively to keep consumer prices up at the expense of investment.

To make agriculture meet these three conditions may require phasing. Distortions may appear that must be corrected to enable agriculture gradually to adjust its relations with the rest of the economy but, in due course, agriculture must satisfy these key variables of the dynamic of its relations with industry.

The first variable is largely dependent on the pace of job creation outside agriculture, the capacity of industry and services to absorb the rural labour surplus. The quantities produced may have no effect on labour productivity if they are accompanied by a proportionate increase in the population employed in agriculture.¹

In Algeria, the increase in output per worker cannot be obtained by increasing the area cultivated per unit of labour, as was partly the case in Europe, but must be the fruit of an improvement in the physical yields of crops and livestock farming. In that way the profitability of investment in production factors will be assured and hence that of backward-linked industrial sectors. In fact, as analysis of the Algerian case shows, in an autocentred development model, the growth of yields is the key to the whole dynamic of relations between agriculture and industry.

In the absence of advances in agricultural productivity, the rise in agricultural prices consequent upon the global stagnation of agricultural production may still fuel agriculture's demand for industrial goods, but at the price of a fall in real wages and the standard of living of the great mass of urban workers. To avoid this spiral, the state has to import food products that are in short supply on the market and subsidize producer prices for commodities in order to protect agriculture from external competition.

The evolution of agricultural productivity rests essentially on agronomic and technical advances, the improvement of animal and plant species, and the introduction of new production methods. It requires that the state not only has the capacity to develop agronomic research and agricultural education and training programmes successfully but also be able to define and establish the social forms of agricultural modernization: in short, to define a path to the modernization of agriculture that meets the conditions of development.