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close this bookForeign Assistance to Agriculture: A Win-Win Proposition - Food Policy Report (IFPRI, 1995, 24 p.)
View the document(introduction...)
View the documentInternational Food Policy Research Institute
View the documentPreface
View the documentThe Potential Rewards of Foreign Assistance
View the documentAgricultural Research Increases Productivity and Growth
View the documentAgricultural Growth Leads to Economic Growth
View the documentEconomic Growth Increases Imports
View the documentImports Increase Export-Country Employment
View the documentPutting the Pieces Together
View the documentConclusion
View the documentNotes

Notes

1. World Bank, World Bank Updates: Bank Lending Helps Expand U.S. Markets (Washington, D.C.: World Bank, 1995).

2. International Monetary Fund, Direction of Trade Statistics Yearbook (Washington, D.C.: IMF, 1994).

3. United Nations, Handbook of International Trade and Development Statistics (New York: United Nations, 1993).

4. World Bank, Common Interests: The United States and the World Bank (Washington, D.C.: World Bank, 1995).

5. Robert Cassen and Associates, Does Aid Work? (Oxford: Clarendon Press, 1986); a World Bank study of 221 agricultural projects undertaken between 1961 and 1980 found that these projects had an average annual rate of return of 17 percent, much higher than the real interest rate in the private capital market, which is an indicator of returns on alternative investments (World Bank, Tenth Annual Review of Performance Audit Results [Washington, D.C.: World Bank, 1984]).

6. Vernon Ruttan, Agricultural Research Policy (Minneapolis, Minn., U.S.A.: University of Minnesota Press, 1982).

7. A study of 124 projects found similar rates of return (RubG. Echeverr ed., Methods for Diagnosing Research System Constraints and Assessing the Impact of Agricultural Research, vol. 2, Assessing the Impact of Agricultural Research [The Hague: International Service for National Agricultural Research, 1990]). Another study by Robert Evenson reviewed the rates of return from over 100 studies. Only 1 of the studies had a negative return, and the highest annual return was more than 200 percent. Of the 92 research projects cited conducted by public or international agencies in developing countries, more than half (49) had annual returns greater than 50 percent, another 28 projects yielded returns between 30 and 50 percent, and 8 (less than 10 percent of the sample) had returns between 0 and 20 percent (Robert E. Evenson, Research and Extension in Agricultural Development, International Center for Economic Growth Occasional Paper No. 25 [San Francisco: ICS Press, 1992]).

8. W. A. Lewis, “Economic Development with Unlimited Supplies of Labor,” Manchester School of Economic and Social Studies 22, no. 2 (1954): 139-191; A. O. Hirschman, The Strategy of Economic Development (New Haven: Yale University Press, 1958).

9. International Food Policy Research Institute, Agricultural Growth Linkages in Sub-Saharan Africa: Summary of a Report to the U.S. Agency for International Development (Washington, D.C.: International Food Policy Research Institute, 1994).

10. Hans Binswanger, The Economics of Tractors in South Asia (New York and Hyderabad, India: Agricultural Development Council and the International Crops Research Institute for the Semi-Arid Tropics, 1978).

11. Clive Bell, Peter Hazell, and Roger Slade, “The Prospects for Growth and Change in the Muda Project Region, Malaysia,” in Village-Level Modernization in Southeast Asia, ed. Geoffrey B. Hainsworth (Vancouver, Canada: University of British Columbia Press, 1982); Steven Haggblade, Peter Hazell, and James Brown, “Farm-Nonfarm Linkages in Sub-Saharan Africa,” World Development 17, no. 8 (1989): 1173-1201.

12. Romeo Bautista, “Domestic Terms of Trade and Agricultural Growth in Developing Countries,” in The Balance between Industry and Agriculture in Economic Development, ed. Nurul Islam, vol. 5, Factors Influencing Change (London: Macmillan, 1989). Similarly, Alain de Janvry and Elisabeth Sadoulet found that a 10 percent increase in agricultural output led to a 14 percent rise in manufacturing output (“The Conditions for Compatibility between Aid and Trade in Agriculture,” Economic Development and Cultural Change 37, no. 1, [1988]: 1-30).

13. For India, Peter Hazell and Steven Haggblade found a value of $1.64 (Rural-Urban Growth Linkages in India, PRE Working Paper No. 430 [Washington, D.C.: World Bank, 1990]). C. Rangarajan found a value of $1.70 (Agricultural Growth and Industrial Performance in India [Washington, D.C.: International Food Policy Research Institute, 1992]). Peter Hazell, C. Ramasamy, and V. Rajagopalan found a value of $1.83 (“An Analysis of the Indirect Effects of Agricultural Growth on the Regional Economy,” in The Green Revolution Reconsidered: The Impact of High-Yielding Rice Varieties in South India, ed. Peter Hazell and C. Ramasamy [Baltimore, Md., U.S.A.: Johns Hopkins University Press, 1991]).

14. Christopher Delgado et al., “Agricultural Growth Linkages in Sub-Saharan Africa,” report to the U.S. Agency for International Development (Washington, D.C.: International Food Policy Research Institute, 1994). Other results from this study were $1.97 for Senegal and $2.48 for Zambia.

15. The figure for Latin America comes from Steven Haggblade and Peter Hazell, “Agricultural Technology and Farm-Nonfarm Growth Linkages,” Agricultural Economics 3, Special Issue, International Agricultural Research Systems (1989): 345-364. This study also found values ranging from $1.28 to $1.47 for Africa and $1.38 to $1.74 for Asia. Other reported values are $1.50 for Nigeria and Sierra Leone and $2.81 specifically for Gusau, Nigeria (Steven Haggblade, Peter Hazell, and James Brown, “Farm-Nonfarm Linkages in Sub-Saharan Africa”). For Muda, Malaysia, one study found a value of $1.83 (Bell, Hazell, and Slade, “The Prospects for Growth and Change”). Another study found a value of $1.71 for Muda, Malaysia, as well as $1.35 for rural Sierra Leone (Steven Haggblade, Jeffrey Hammer, and Peter Hazell, “Modeling Agricultural Growth Multipliers,” American Journal of Agricultural Economics 73, no. 2 [1991]: 361-374). A study by Paul Dorosh and Steven Haggblade reported values ranging from $1.80 to $2.70 for Madagascar (“Agriculture-led Growth Linkages in Madagascar,” Agricultural Economics 9, no. 2 [August 1993]).

16. This figure represents only the first-round, direct effects of a change in agricultural income on overall income. It does not incorporate indirect effects, like those mentioned earlier on consumption. In technical terms, this number represents the marginal effect rather than the total multiplier effect.

17. Erkin I. Bairam, “Income Elasticities of Exports and Imports: A Re-examination of the Evidence,” Applied Economics 25, no. 1 (January 1993): 71-74. Other results from this study were Colombia, 19.1 percent; Indonesia, 27.7 percent; Pakistan, 29.0 percent; the Philippines, 24.2 percent; Syria, 23.7 percent; and Thailand, 19.4 percent.

18. James P. Houck and Charles E. Rossman, “Agricultural Productivity and International Food Trade: A Cross-Section Approach,” in Trade and Development: Impact of Foreign Aid on U.S. Agriculture, ed. Gary Vocke (Washington, D.C.: U.S. Department of Agriculture, Economic Research Service, 1988).

19. Khwaja Sarmad, “The Determinants of Import Demand in Pakistan,” World Development 17, no. 10 (1989): 1619-1625. This study showed that Pakistan’s total imports would rise by 6.3 percent and imports of oils and fats would rise by 14.2 percent in response to a 10 percent rise in GNP. Khwaja Sarmad and Riaz Mahmoud conducted another study of Pakistan and found the following results: imports of milk and cream would rise 42.1 percent; spices, 16.0 percent; fresh fruits, 13.8 percent; and tea, 59.4 percent (“Price and Consumer Elasticities of Consumer Goods Imports in Pakistan,” Pakistan Development Review 24, nos. 3-4 [1985]: 453-460). A study of the increase in rice imports in response to a 10 percent increase in GNP showed these results: India, 103.2 percent increase; Korea, 27.2 percent; Malaysia, 3.4 percent; Pakistan, 50.5; the Philippines, 11.8 percent; and Sri Lanka, 9.7 percent (Badrul Islam, “Price, Income, and Foreign Exchange Reserve Elasticity for Asian Rice Imports,” American Journal of Agricultural Economics [August 1978]: 532-535). Desmond F. McCarthy, Lance Taylor, and Cyrus Talati found that in 55 developing countries merchandise imports would rise 10.3 percent in response to a 10 percent rise in GNP (“Trade Patterns in Developing Countries,” Journal of Development Economics 27, nos. 1-2 [October 1987]: 5-39).

20. Bruna Angel, Tom Harrington, William Meyers, and Stanley Johnson, Quantitative Analysis of Less-Developed Country Economic Growth and Agricultural Trade: Literature Review (Ames, Iowa, U.S.A.: Center for Agricultural and Rural Development, Iowa State University, 1989).

21. Romeo Bautista, “Agricultural Growth and Food Imports in Developing Countries: A Re-examination,” paper for the Festschrift in honor of Professor Shinichi Ichimura, Kyoto University, undated.

22. Kenneth Bachman and Leonardo Paulino, Rapid Food Production Growth in Selected Developing Countries: A Comparative Analysis of Underlying Trends, 1961-76, Research Report No. 11 (Washington, D.C.: International Food Policy Research Institute, 1979).

23. Earl Kellogg, “University Involvement in International Agricultural Development Activities: Important Issues for Public Education,” speech given at the annual meeting of the Association of U.S. University Directors of International Agricultural Programs, Athens, Georgia, 1985. Kellogg found that countries with rapidly developing agriculture raised their agricultural imports by 47 percent between 1970 and 1980, while countries with slowly developing agriculture increased such imports by 37 percent.

24. James P. Houck, Foreign Agricultural Assistance: Ally or Adversary? Department of Agricultural Economics Staff Paper No. 86-50 (Minneapolis, Minn., U.S.A.: University of Minnesota, 1986).

25. Kumaresan Govindan, “Technological Change and Trade Patterns,” (Ph.D. dissertation, University of Minnesota, 1993).

26. Gary Vocke, “Agricultural Trade, Self-Sufficiency, and Economic Development,” in Trade and Development: Impact of Foreign Aid on U.S. Agriculture, ed. Gary Vocke (Washington, D.C.: U.S. Department of Agriculture, Economic Research Service, 1988).

27. World Bank, World Bank Updates.

28. International Monetary Fund, Direction of Trade Statistics Yearbook.

29. De Janvry and Sadoulet, “The Conditions for Compatibility.”

30. De Janvry and Sadoulet, “The Conditions for Compatibility.”

31. Robert Thompson, “Farm, Trade, and Development Policies: What They Mean for Future U.S. Export Markets,” in Aid, Trade, and Farm Policies: Workshop Proceedings, ed. Wayne E. Swegle and Polly Ligon (Washington, D.C.: Winrock International, 1989); and Robert Havener and Christopher Dowswell, “Food Production in the Third World and Implications for U.S. Agriculture,” in U.S. Agriculture and Third World Economic Development: Critical Interdependency (Washington, D.C.: National Planning Association, 1987).

32. E. A. Jaenke and Associates, Third World: Customers or Competitors? (Washington, D.C.: Jaenke and Associates, 1987).

33. Earl D. Kellogg, “Agricultural Development in Developing Countries and Changes in U.S. Agricultural Exports,” undated.

34. Forty percent is a conservative estimate based on results cited earlier in Cassen and Associates, Does Aid Work?; Ruttan, Agricultural Research Policy; and Echeverr Methods for Diagnosing Research System Constraints.

35. This figure represents the value in terms of additional imports to the typical agricultural research project with a 40 percent annual rate of return over its lifetime, assumed to be 30 years, discounted at a real rate of interest of 5 percent.

Per Pinstrup-Andersen is director general of IFPRI. Mattias Lundberg was recently a research analyst at IFPRI and is now a doctoral candidate in agricultural economics at Michigan State University. James L. Garrett is a special assistant in the director’s office of IFPRI.

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