Syndicate content

Macroeconomics and Economic Growth

The Global Food Crisis: Will Investments in Agricultural Technology be enough?

Forhad Shilpi's picture

Contributed by Forhad Shilpi and Uwe Deichmann

Will investments in agricultural technology by themselves be sufficient to ensure long-term productivity growth in the farm sector and, more importantly, for rural poverty reduction?  As rapidly rising food prices threaten food security and the poverty gains made by developing countries, many have blamed declining funding for agricultural technology development for this state of affairs (for example, the New York Times).

This question is highly relevant for South Asia.  Shanta Devarajan has commented on the recent rice export ban by India and its implication for its neighbor, Bangladesh, which has become a net rice importer this year due to floods and cyclone impacts.  But Bangladesh also provides evidence that agricultural technology by itself is unlikely to lead to adequate growth in agricultural output if factors such as physical and economic geography and infrastructure needs are not considered.

In a recent study, we examine these issues for Bangladesh. During the early 1990s, Bangladesh experienced widespread diffusion of green revolution technology in rice, its main crop. As a result, rice production has more than doubled since the early 1970s. The spread of green revolution technology is usually expected to boost wages for farm workers.  But we found regional differences in rural wages that run counter to the traditional argument.

Banking everywhere, and not a single village left out

Ignacio Mas's picture

Only about one-quarter of households living in developing countries have any form of financial savings with formal banking institutions. Even in countries that have experienced substantial development over the last decade or two, this statistic remains stuck stubbornly at a level that would not be acceptable for any other measure of socio-economic development: 10% in Kenya, 20% in Macedonia, 25% in Mexico, 32% in Bangladesh.

 

Pages