Introduction
The positive trends in the emergence of urban economic developments remaining another attention that in fact a large number of population in the rural area, especially, in many developing countries still overwhelmed. According to FAO (Food and Agriculture Organization), In 2010 over 3.1 billion people, or 45 percent live in rural areas. Meanwhile, World Bank estimated that For the 70 percent of the world's poor who live in rural areas, agriculture is the primary source of income and employment.
Furthermore, World Bank Estimated that the developing countries experienced faster growth in the value of agriculture output (2.6% per year) than the developed countries (0.9% per year) during 1980 until 2004. Another fact that lower income countries tend to have the highest share of the labor force in agriculture sector nearly as much as 80% to 90%. Thus, the agriculture sector becomes an interesting topic to be discussed regarding economic development (Todaro and Smith, 2010 pp. 419)
According to Lewis (1954) 'dual economy' model the agricultural sector often associated with the traditional sector, instead of the modern sector (Ray, 1998). In many developing countries, the agricultural sector often regarded as a vital area, because by maintaining this sector, it might indicate that the country has capabilities to support their basic needs of people nutrition. Due to the importance of this sector, the government is responsible for imposing strategic policies to maintain national food security.
In the early 1960s, many developing countries were adopting Green Revolution Agenda as deliberate attempts to increase their agricultural sector productivity. The agenda was inspired by a successful story of Mexico farming practice in producing more agricultural products by adding technological improvements that then the technologies were adopted worldwide in the early 1950s and 1960s. The United States, for example, has imported half of their wheat needs in the 1940s, however, after they adopted Green Revolution technologies, the country had become self-sufficient in that commodity in 1950s and even become an exporter by 1960s (see http://geography.about.com/).
One notable country has successfully adopted Green Revolution in South Asia was India. In the middle of 1960s both India and Pakistan (in South Asian context) realized that they had serious agricultural productivity dilemma. India, in particularly, where at the same time followed by the high-density population, almost had lost the capacity to feed itself. This urged the government for taking strategic agricultural policies which at the fist step they adopting high-yield varieties (HVS) that known as “Green Revolution.” (Freebairn, 1995)
This essay is designed to discuss the role of agricultural sector in the process of a country’s economic development. In this article, the role of agriculture will be illustrated by the green revolution in India affected both macro and micro economic levels based on empirical evidence. Furthermore, it has been organized in the following way. Firstly, a literature review about how the agricultural sector affects economic development in a country either in macro or microeconomic level that then construct theoretical and conceptual background. Second, explaining illustration about how the conceptual framework runs trough empirical approaches where in this essay it will take Indian Green Revolution as an example case studies. Finally, the brief conclusion and findings of the Green Revolution in practice and how that affects macro and microeconomic level in India, also, some policy recommendation related to the results for further agricultural based economic development strategies.
B. Literature Review:
Discussing the role of agriculture in economic development, it is better to re-examine the economic inequality in a rural-urban context such as rural-urban migration. Ray (1998) points out that a notable encourages people to migrate from rural to the urban region is caused by extreme poverty and growing landless beside other new social mindset influenced by mass media that promotes urban lifestyle as a desirable role model of wealthy.
To examine how the rural-urban economy interacts, Lewis ‘Dual Economy’ model might give more explanation to this realm. The model divides two main sectors of the economy that comprise traditional and modern sector that interact each other. According to this theory, the traditional sector regarded as labor supplier for the modern sector, whereas, the role of the modern sector is to absorb this supply (Ray, 1998).
In the history of development economics, the agriculture sector has been thought as a supportive role for the industrial economy, where, the agriculture sector could supply small food prize and cheap labor. In the Lewis two sector model (see Ray, 1998), for instance, there put more attention to industrial economy as a leading sector, while the role of agriculture was only playing a passive and supportive role for an industrial economy.
Recently, a considerable literature has grown up around the theme agricultural economic development challenges. Todaro and Smith (2010; 436) for instance, explained that one of a primary reason for poor performance in agriculture development is neglected by the government development priority policy, where, the government is often paying too much attention to urban industrial development supported via import substitution and exchange rate overvaluation. This idea is more prevail to be adopted by policymakers in many developing countries during the early post-war decades.
The more specific question has to be answered then, what is the role of the agriculture sector to economic development? According to Kuznets (1961), ‘agriculture makes a product, market, and factor contributions to economic development’. Also, Johnson and Mellor (1961) argue that agriculture increase food supplies, enlarges agricultural exports, transfers manpower, forms capital, and stimulates industrialization trough increased rural net cash income’. Additionally, according to World Bank (182b), ‘Economic growth has been rapid in virtually all those countries where agricultural development has been strong’ (see Mellor et al., 1999 pp.340).
Pondering upon those argumentations, the agricultural sector will considerably giving a positive contribution to overall economic development in a country. As illustrated in Figure 1, the role of agriculture sector not only contributes to the needs of nutrients but also any development aspects. Any other direct contribution of the traditional sector such as the development of labor market and human capital which mean this sector might be labor-intense and giving mutual relationship for inter-linkages with any other aspects include capital market, infrastructure, foreign exchange, etc.
To examine the stages grow of the agricultural sector in developing countries, Rostow (1960, see Mellor et al., 1999) has divided it into three main stages: Traditional (static), transitional, and modern (dynamic). Relationship of those steps from traditional to modern level correlates with the degree of contribution to economic development. Thus, the more modern the agricultural sector, the more contributive the sector to the economic development of the country. The major characteristics for each agricultural levels are summarized in Table 1.
Todaro and Smith (2010: 417) argue that there are tree essential elements of agricultural-based strategy of economic development: ‘(1) Accelerated output growth trough technology, institutional, and price incentive changes designed to raise the productivity of small farmers; (2) raising domestic demand for agricultural output derived from an employment oriented urban development strategy; and (3) diversified, nonagricultural, labor-intensive rural development activities that directly and indirectly supported by farming community’.
It is true that in the agricultural sector, land as a factor production might lead to diminishing return because the land itself can be categorized to be fixed in supply. Therefore, for a certain amount of people who acted as agricultural labor will be less productive because the diminishing return effect. Many Asian countries, such as India has relatively high-density population. In this situation, the diminishing return effects might affect more significantly by the national output of those countries. Even, for many developing countries, the agricultural sector often regarded as primary economic resources. To deal with the land limitations caused by diminishing return effect, the land augmentation is one fundamental solution. In this phase, the technological factors could take the role of maximizing all the production factors to get maximum returns at the limitation of land and labor proportion (see Mellor et al., pp. 342-343)
In the microeconomic level, according to Lipton (1989), smaller farmers and laborers are groups that benefited from Green Revolution. The agenda could increase employment opportunity for labourers due to several reasons: (1) As MVs mature sooner than traditional varieties, they allow multiple cropping which then increasing labor demands; (2) Because sowing and transplantation labor is needed due to densities of plants in fields needs to be high caused by MVs economically feasible yield, gender division work is required (women often benefited); (3) Extra energy is required to place the fertilizer and wedding seed; (4) As MSs increase landowners income, it leads to their preference for leisure that then causes growth in non-agricultural employment (see Das, 2002 pp. 57-58 )
C. Empirical illustration in selected countries: Green revolution in India
Before the green revolution has introduced as a new approach to agriculture practice in India, there were traditional imperfect methods adopted by Indian peasants. The most limitation affected by the primitive methods include less productive yields, although most of the lands had been devoted to foodgrain production. Also, severe famines were vulnerable to be found in many regions in mainly rural areas. This situation was deteriorated by overpopulation pressure on farming that caused chronic unemployment and spontaneous urbanization. (Chakravarti, 1973 pp. 319)
In the early 1960s, Indian Central Government took strategic agricultural policies by supporting their agricultural sector with new technological methods that this step was bringing the country to the Green Revolution Agenda. In general statements, The Green Revolution itself is the involvement of technological factors in the agricultural production process. In India, the primary technical involvements including several new crops varieties, fertilizers, and new power source among others (see Goldman and Smith, 1995).
As part of green revolution agenda in India, High Yielding Variety Seed Program (H.V.P) gave a fundamental background for that. One of the positive impacts of that was a surplus of crop production. However, that was not necessarily implied to the brief conclusion that the Green Revolution in India was entirely satisfied if we consider another fact that the successful trend of food production quantitatively was not directly followed by a decrease of economic inequality in each Indian states.
Another question is, ‘How the green revolution in India gives benefits for macroeconomic levels?’ In general, The green revolution in India has contributed to increasing of national agricultural productivity. It can be seen in figure 2 that during 1960 to 1987 the number of grain production in India increased considerably while the grain import trends appeared to decrease. This circumstance might indicate that there was a positive trend of national food security in India and reducing the partial dependency of food import supply. Moving further, as seen in figure 3, in a regional context, High Yield Variety affected positively to the overall crop productivity, although there was a variation in the level of the ratio among Indian regionals.
In the microeconomic level, according to a study by Goldman and Smith (1995) in two Indian regions, the technological adoption in farming has contributed to changes in Indian labor economy. One of the famous green revolution areas in India was Punjab State in the country’s northwest. During the period between 1964-1965 and 1984-1985 of Green Revolution, wheat production in Punjab rose significantly from 2.4 million metric tons to 10.2 million tons (Bhalla et al., 1990, see Goldman and Smith, 1995).
For a more comprehensive picture of comparing about how significant change of green revolution in wheat and rice production in Punjab, it can be seen in Table 2. According to the Table 2, that total food grain production increased 245% during 1965 to 1978. During the same period of green revolution, wheat, and rice productivity have grown for 130% and 155% respectively. Comparing with agricultural factor production influenced by green revolution characteristics (adding technological factors) in village level, it appeared a positive correlation as a cause of total food production growth. For example, regarding mechanization, almost no peasant utilized tractors to cultivate their lands in 1965. Until 1986, there were even nine tractors in villages, by that year, bullocks and camels no longer used for draft power in the community for cultivating and irrigating. This overall trends might be indicating that the technological factors influence the level of productivity considerably.
More specific economic impacts in micro levels were the increase of labor income includes unskilled laborer, for both full and part-time workers over 300% from 1965 to 1978. This circumstance also affected not only higher but also more secure income than the older nonfood cash crops, thus, it was increasing the value of agricultural-based entrepreneurship in general (see also Goldman and Smith, 1995).
Another important issue concerning how The Green Revolution as a form of strategic agricultural policies affects economic development in a country is how significant this sector overcome inequality-related issues. Continue to Punjab sample studies, as the most prosperous state in India, the economic inequality still becomes a serious problem. Even the gap become more apparent after green revolution policies were implemented such as between rich-capital farmer and small and marginal farmer, also, between irrigated territories and not flooded territories.
According to Balla and Chadda studies (in Dhanagare, 1987 p.139) that conducted a survey in selected som 180 Punjab villages, in their total sample there were 140 (4.8 %) household having marginal farms of the averages size 1.6 acres ; at the other end of spectrum were 74 (4.4. %) large farms of the average size of 32.8 acres (Bhalla et al, 1983:34). It indicates that the large farmer was almost 20 times the size than of the smallest farm on average. Furthermore, because in early government agriculture policy for irrigation from the 1960s (as a part of Green Revolution Packages) was imposed partially, the average household income gaps, even more, glaring between wet areas (more irrigated) and dry areas (depend on rainfall). In national context, the level of productivity growth in agricultural sector also seemed unequal among each Indian states (see figure 3)
D. Conclusion
One strategic point regarding economic development is how the government-advantaged by any resources that they have. It is true that today's industrial-based economic development that categorized as the modern sector is relatively more attractive to support overall economic growth instead of a traditional sector that often related to the agricultural and rural economy. However, another fact assumed that the agricultural sector has significant roles in economic development:
First, by maintaining sustainable development in agricultural sector, the government have taken responsible for national food security. It can be seen that during the period of Green Revolution in India, the involvement of technological factors (such as the finding of new more fertile seeds for cereals) has influenced an extraordinary story where Indian government has successfully overcome food-supply related problems before adopting The Green Revolution. In the macroeconomic perspective, as the level of agricultural import had been decreased gradually while the level of export in such commodity even surged, it indicates that India has an underlying foundation (by food security) to step up to more industrialisation-based economic development in particularly from the 1990s.
Second, as the agricultural sector mostly related to the rural area instead of urban area, the benefits of sustainable and
Third, It is true that in general, the green revolution in India despite emerging high productivity in the agricultural sector, however, this positive trends remained other problems where economic disparities remained to continue in some regions. In the local context of Punjab case study, for instance, the capital power disparities still emerged more significant gap and inequalities between rich farmer and the small and marginal farmer. Moreover, the large gap between agricultural productivity also remained to occur during the green revolution period among each Indian regions.
Appendix
Figure 1: Sectoral Linkages and contribution of agriculture to economic development
Source: Mellor et al., 1999. p. 341
Figure 2: Impact of the green revolution in India
Source: Haraksingh, I., 2013, originally James Killoran et al., The Key to Understanding Global History, Jarrett Publishing Co, (Adapted)
Figure 3: High Yield Variety (HYV)-Crop productivity by state: 1961-1981 (Ratio of yields per acre by year to yields per acre in 1961 in that state)
Source: Foster and Rosenzweig, 1996 p. 93
Table 1. Summary of major characteristics of agricultural development from stage I trough stage II and into stage III
Source: Mellor (1999), originally from Wharton (1963a)
Table 2. Agricultural change in Punjab, 1965-1978
Source: Goldman and Smith (1995), originally from Leaf (1987, 1984)
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