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IMPORTANCE OF AGRICULTURAL DEVELOPMENT IN THE GLOBALIZATION

Makarchuk Oksana

Ph.D. in Economics, Assosiate Professor of

Accounting, Analysis and Audit

National University of Life and Environmental Sciences of Ukraine

 Kyiv

 

IMPORTANCE OF AGRICULTURAL DEVELOPMENT IN THE GLOBALIZATION

 

Broad-based economic growth is one of the most effective antipoverty programs. Economic growth creates jobs and raises the incomes of the poor. To a limited degree, government projects can contribute directly to economic growth; but in general governments do not create jobs very efficiently. Developing countries must rely on growth in the private sector for their economic prosperity [1].

Since the early 1990s, a vociferous debate has taken place about the desirability of “globalization”. Globalization (or globalisation) is the process of international integration arising from the interchange of world views, products, ideas and other aspects of culture [2]. For developing counties, a policy the embraced globalization would entail the following:

  • opening borders to trade by reducing impediments to imports and exports, and subjecting these regulations to restrictions imposed by the World Trade Organization;
  • adopting macroeconomic policies required as conditions for loans from the International Monetary Fund;
  • adopting market-oriented industrial, agricultural, and sectoral policies, as a condition of obtaining IMF loans;
  • reducing restrictions or regulation that discourage foreign investment;
  • adopting labor and environmental policies that will attract foreign investment.

There is the question whether increased globalization good for economic growth of poor countries, and weather it beneficial to the poorest people in poor countries. Paul Collier and David Dollar of the World Bank in 2002 conducted a study in which they divided countries into three groups. In rich countries, income per capita grew at an annual rate of about 2 percent per year; in “more globalized” poor countries – poor countries with a relatively high proportion of international trade to national income – income per capita grew at an annual rate of 5 percent per year; and in “less globalized” poor countries, income per capita declined at a rate of 1 percent per year.

In addition to the preceding recommendations for growth, many economists would emphasize the importance of promoting growth in the agricultural sector. The economies of almost all developing countries are dominated by the agricultural sector. One of the most important stimulants to economic growth and increased employment in these economies is increased agricultural production. This is important not only because increased agricultural production increases farm employment, but also because increasing the quantity of food supplied lowers its price.

As low food prices make low wage rates possible, employment is stimulated not only in the export sector but also in the domestic sector of the economy. Local manufacturers can compete more successfully with importers to manufacture goods. Low food prices reduce the proportion of the household budget that all people, middle- and upper-income people as well as low-income people, must allocate to food, thus releasing purchasing power for nonfood items. This raises the demand for nonfood goods and services and further increases employment.

Continued population and food demand growth, increasing environmental concerns such as climate change, tightening water supply, and degrading soils are placing ever greater strains on global agriculture. With global agricultural demand expected to increase by more than 60 percent between 2005-07 and 2050, a new wave of productivity increases will be needed to sustainably meet this demand [3].

Agricultural research and innovation have been pivotal to increasing productivity. The global agricultural research and innovation landscape has been changing, with funding trends shifting dramatically. Besides a drop in the share of research and development (R&D) investments made by high-income countries, especially the United States, investments have shifted away from a focus on farm productivity improvements in staple crops and been redirected to a wide variety of other issues. Further, many national research programs fail to take full advantage of the vast stocks of knowledge that exist around the world and that could be tapped to spur innovation elsewhere. E.g, in US is very popular agricultural extension services for farmers. Agricultural extension is meaning the application of scientific research and new knowledge to agricultural practices through farmer education. The field of extension now encompasses a wider range of communication and learning activities organized for rural people by educators from different disciplines, including agriculture, agricultural marketing, health, and business studies.

 

References

  1. The world food problem: toward ending undernutrition in the Third World / H. Leathers, P. Foster. – 4th ed. – USA: Riener, 2009. – 433 p.
  2. Wikipedia [Electronic resource] / Access mode to resource [http://en.wikipedia.org/wiki/Globalization].
  3. Agricultural Innovation: The United States in a Changing Global Reality / [P.Pardey, J. Beddow]. – USA: The Chicago Council on Global Affairs, 2013. – 64 p.
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