• TABLE OF CONTENTS
HIDE
 Front Cover
 Title Page
 Table of Contents
 Introduction
 Insights from supply response...
 Patterns of international agricultural...
 Impact of adjustment on agricu...
 Declining investments in agric...
 Causes of reduced investment in...
 Agricultural sector policy issues...
 Summary and conclusions
 Tables
 Figures






Group Title: International working paper series IW92-30
Title: Structural adjustment and agriculture
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 Material Information
Title: Structural adjustment and agriculture a comparative perspective on performance in Africa, Asia, and Latin America
Series Title: International working paper series
Physical Description: 39, 18 p. : ill. ; 28 cm.
Language: English
Creator: Lele, Uma J
Conference: Seminar on Food and Agricultural Policies Under Structural Adjustment, (1992
Publisher: Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla
Publication Date: [1992]
 Subjects
Subject: Structural adjustment (Economic policy) -- Africa   ( lcsh )
Structural adjustment (Economic policy) -- Asia   ( lcsh )
Structural adjustment (Economic policy) -- Latin America   ( lcsh )
Agriculture -- Economic aspects -- Africa   ( lcsh )
Agriculture -- Economic aspects -- Asia   ( lcsh )
Agriculture -- Economic aspects -- Latin America   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Includes bibliographical references.
Statement of Responsibility: Uma Lele.
General Note: "November 1992"--Cover.
General Note: "Keynote address to the First Plenary Session of the European Association of Agricultural Economists' Seminar on Food and Agricultural Policies Under Structural Adjustment, September 21-25, 1992, Hohenheim, Germany."
Funding: Electronic resources created as part of a prototype UF Institutional Repository and Faculty Papers project by the University of Florida.
 Record Information
Bibliographic ID: UF00054795
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001784450
oclc - 27377053
notis - AJK7832

Table of Contents
    Front Cover
        Front Cover
    Title Page
        Page 1
    Table of Contents
        Page 2
    Introduction
        Page 3
        Page 4
        Page 5
    Insights from supply response literature
        Page 6
        Page 7
        Page 8
    Patterns of international agricultural trade before and after adjustment
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
    Impact of adjustment on agriculture
        Page 16
        Page 17
        Page 18
        Page 19
    Declining investments in agriculture
        Page 20
        Page 21
        Page 22
        Page 23
    Causes of reduced investment in agriculture
        Page 24
        Page 25
    Agricultural sector policy issues in adjustment
        Page 26
        The fallacy of stabilization argument (again?)
            Page 26
            Page 27
        Price stabilization
            Page 28
            Page 29
            Page 30
            Page 31
            Page 32
        Fertilizer subsidies
            Page 33
            Page 34
        Employment and income effects
            Page 35
        Agricultural credit
            Page 35
            Page 36
        Land policy
            Page 37
    Summary and conclusions
        Page 38
        Page 39
    Tables
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
        Page 49
        Page 50
        Page 51
    Figures
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
Full Text



IW92-30


INTERNATIONAL WORKING PAPER SERIES












Fr-


FOOD AND RESOURCE ECONOMICS DEPARTMENT
Institute of Food and Agricultural Sciences
University of Florida
Gainesville, Florida 32611


STRUCTURAL ADJUSTMENT AND AGRICULTURE:
A COMPARATIVE PERSPECTIVE ON
PERFORMANCE IN AFRICA, ASIA,
AND LATIN AMERICA


By
Uma Lele


IW92-30


November 1992























STRUCTURAL ADJUSTMENT AND AGRICULTURE: A COMPARATIVE PERSPECTIVE
ON PERFORMANCE IN AFRICA, ASIA, AND LATIN AMERICA1


Uma Lele2,3
















'Keynote address to the First Plenary Session of the European Association
of Agricultural Economists' Seminar on Food and Agricultural Policies under
Structural Adjustment, September 21-25, 1992, Hohenheim, Germany.

2Graduate Research Professor, Food and Resource Economics Department, and
Director of International Studies and Programs, University of Florida,
Gainesville, Florida, 32611, Tel. (904)392-3246 or 5068, Fax (904)392-5575 or
392-2395.

3Support for the preparation of this paper was provided by the Rockefeller
Foundation and the International Monetary Fund as part of a larger study of
Structural Adjustment and Agriculture. For detailed empirical evidence in
support of many of the arguments made in this paper see Uma Lele, Kofi Adu-Nyako,
and Robert Emerson, "Structural Adjustment and Agriculture", forthcoming. I
alone am responsible for the views expressed in this paper and the deficiencies
that remain. They should not be attributed to the supporting institutions. I am
grateful to Kofi Adu-Nyako for his comments on the earlier draft and to Dieudonne
Mann and Rahul Jain for research assistance.









Table of Contents


INTRODUCTION

INSIGHTS FROM SUPPLY RESPONSE LITERATURE

PATTERNS OF INTERNATIONAL AGRICULTURAL TRADE
BEFORE AND AFTER ADJUSTMENT

IMPACT OF ADJUSTMENT ON AGRICULTURE

DECLINING INVESTMENTS IN AGRICULTURE

CAUSES OF REDUCED INVESTMENT IN AGRICULTURE

AGRICULTURAL SECTOR POLICY ISSUES IN ADJUSTMENT

The Fallacy of Composition Argument (Again?)
Price Stabilization
Fertilizer Subsidies
Employment and Income Effects
Agricultural Credit
Land Policy

SUMMARY AND CONCLUSIONS

TABLES

FIGURES



















Structural Adjustment and Agriculture: A Comparative Perspective
on Performance in Africa, Asia, and Latin Americal

Uma Lele2,3



INTRODUCTION

In this paper I argue that structural adjustment has diverted attention from

agriculture. The importance of increasing factor productivity in agriculture

in resuming rapid economic growth, alleviating poverty, increasing women's

participation, and saving the environment is being overlooked. These latter

issues are currently at the forefront and agriculture has become their

unexpected victim. This is an ironic outcome and certainly not the one which

supporters of these various good things (myself included) would wish. After


1Keynote address to the First Plenary Session of the European Association
of Agricultural Economists' Seminar on Food and Agricultural Policies under
Structural Adjustment, September 21-25, 1992, Hohenheim, Germany.

2Graduate Research Professor, Food and Resource Economics Department, and
Director of International Studies and Programs, University of Florida,
Gainesville, Florida, 32611, Tel. (904)392-3246 or 5068, Fax (904)392-5575 or
392-2395.

3Support for the preparation of this paper was provided by the Rockefeller
Foundation and the International Monetary Fund as part of a larger study of
Structural Adjustment and Agriculture. For detailed empirical evidence in
support of many of the arguments made in this paper see Uma Lele, Kofi Adu Nyako,
and Robert Emerson, "Structural Adjustment and Agriculture", forthcoming. I
alone am responsible for the views expressed in this paper and the deficiencies
that remain. They should not be attributed to the supporting institutions. I am
grateful to Kofi Adu Nyako for his comments on the earlier draft and to Dieudonne
Mann and Rahul Jain for research assistance.







all, structural adjustment was and continues to be directed to (among other

things) boosting exports, and agriculture is still an important, albeit

declining, source of exports in many developing countries (Figure 1). Through

devaluation and elimination of taxes adjustment raises internal terms of trade

in favor of agriculture and such intersectoral redistribution of income

provides a boost to food and agricultural production. Moreover, the positive

impact of a stable macroeconomic environment for healthy growth is well

established.'

Yet, whereas price adjustments are crucial, partial price

adjustments can harm the process of broadbased economic growth. Moreover,

price reforms are by no means sufficient. Long term supply response from

agriculture calls for emphasis on nonprice factors. Levels and patterns of

investments in irrigation, agricultural research, extension, transport,

communications, and human capital are critical in increasing agricultural

production. Investments especially with a focus on women and children in

health, education, and village water supply determine the size and quality of

the population and their access to technologies. They in turn determine

whether labor remains in agriculture or migrates to other sectors. Such

investments are more important at an early stage of development in which

agriculture dominates in GNP, exports, employment, government revenues, food

supply, and industrial raw materials, and when agriculture is the major source

of demand for goods and services produced in the manufacturing sector. But

non-price factors are by no means unimportant at later stages. The share of

employment in agriculture still dominates over that in manufacturing in



4See Mohsin Khan, "The Macroeconomic Effects of Fund-Supported Adjustment
Programs," in IMF Staff Papers, Vol. 37, No. 2, June 1990 (pp. 195-231).

4







countries such as Indonesia and China, and a small percentage growth in

agricultural employment is equivalent to a large percentage growth in

manufacturing employment. Besides, agricultural growth tends to have strong

multiplier effects on the manufacturing and service sectors.

Long run development considerations are increasingly being

incorporated in adjustment operations by both the IMF and the World Bank.5

But the focus of these two institutions is on the short term. The

intellectual effort they devote to analysis is on middle income countries and

sectors other than agriculture. What little emphasis is given to agriculture

focuses on Africa. The lessons from the successful middle income East Asian

countries6 in industrial and financial liberalization are cited frequently,

but the important historical experience in their agricultural development is

rarely explored. The lessons of their experience are of interest not simply

to the small open economies of Africa, but to South Asia and the low end

poverty groups in Latin America as well.

That experience stresses the nature of externalities and the

importance of public investments in rural development and an intelligent and

enlightened role for the government. But public investments are declining in

developing countries and with them those in agriculture. And for quite

understandable reasons governments have become discredited as parasites and

predators. Yet without increased and improved government action, the

extensive failure in rural factor and product markets, which adjustment aims

to improve, will not occur. Moreover the limits of markets in achieving the


5The IMF, for instance, established the Structural Adjustment Facility (SAF)
in 1986 and followed it up with the Extended Structural Adjustment Facility.

6The four so-called Asian Tigers to the list of which must now be added
China and Thailand.







many development tasks will not be recognized and acted upon.

To stress these contradictions I first provide the context to my

paper by summarizing the findings on agricultural supply response, then based

on the evidence of 53 adjusting countries establish agriculture's performance

in the three continents before and after adjustment, i.e., the changing

patterns of international trade, growth in agricultural value added, growth of

agricultural exports and imports, and evaluate it again in the context of the

recent literature on response of agriculture specifically to adjustment. I

then document the waning attention to agriculture, explore the reasons why,

and identify some of the issues pertinent to agriculture in the context of

adjustment. Then I summarize and conclude.



INSIGHTS FROM SUPPLY RESPONSE LITERATURE

Abstracting from the measurement issues discussed in detail by Binswanger,

econometric evidence indicates that overall supply response in agriculture

tends to be smaller than that of individual crops which (as he correctly

observes) economists often mistakenly cite to illustrate the likely impact of

policy reforms on agriculture.7 The export crop sector tends to show a

greater long-run response than the food crop sector and annual cash crops tend

to be more responsive than tree crops.8 Long run aggregate responses are

much greater than short term responses and nonprice factors are more important

in the long run response than price factors, although price factors are not


7See Hans P. Binswanger, "The Policy Response of Agriculture," in
Proceedings of the World Bank Annual Conference on Development Economics. 1989
(Washington, DC: World Bank, 1989.

8See Raj Krishna, "Some Aspects of Agricultural Growth Price Policy and
Equity in Developing Countries," in Food Research Institute Studies (U.S.), Vol.
18, No. 3, 1986 (pp.219-60).







unimportant. However, recent research has shown that indirect effects of

macroeconomic policies (exchange rate, trade, and tax policies) have been more

significant than direct effects.9 The literature also argues that countries

with weak representation of rural interests are more prone to tax agriculture

heavily than those with a strong representation of rural interests.10

Indeed, subsidies on food, fertilizers, irrigation, and water amount to well

over $1 billion annually each in as diverse a set of countries as India,

Indonesia, Mexico, Brazil, and Nigeria. These subsidies constitute a large

share of overall budget deficits and their reduction constitutes an important

element of reforms under adjustment. It is noteworthy from Table 1, however,

that whereas taxation of agriculture has been the highest in Africa, it has by

no means been insignificant in other countries, many of which have been good

performers in agriculture. Taxation of agriculture has diminished

significantly since the adjustment process began, most notably in Africa.

Indeed, the overall rate of taxation of agriculture may now be comparable in

Asia to that in Africa. But both the quantity and quality of government

expenditures has been a much more significant factor in the development of

agriculture in Asia. Yet how fast, how much, and how should nonagriculture

contribute to the development of agriculture as distinct from agriculture's

contribution to the rest of the economy remains an inadequately understood

issue. In this regard, Taiwan's experience in modernizing agriculture and



9See Anne 0. Krueger, Maurice W. Schiff, and Alberto Valdez, The Political
Economy of Agricultural Pricing Policy (Baltimore: The Johns Hopkins University
Press for the World Bank, 1991).


1'See Robert H. Bates, Markets and States in Tropical Africa: The Political
Basis of Agricultural Policies (Berkeley: University of California Press, 1981).








agriculture's contribution to its industrialization provide some important

insights to contemporary developing countries. Taiwan's average farm size of

1 ha or less is also more in tune with low income countries' agriculture than

the frequently cited example of Argentina which enjoys large scale agriculture

and well developed factor and product markets.11 Moreover, unlike South

Korea (which is a favorite on industrial and financial liberalization) Taiwan

did not protect its agriculture, nor was it a large recipient of external

capital. On the contrary Taiwan exported capital to its nonagricultural

sector, to Japan and more recently to the international capital markets.

Taiwan has had neither a Ministry of Planning nor one for Agriculture, and

until recently had an undemocratic government. How did Taiwan do it?

In an intersectoral analysis of growth accounting covering a 50

year period (1911 to 1960), T.H. Lee, now Taiwan's President, has shown that

agriculture's significant contributions to industrialization were made

possible by intelligent public policy and public investments which greatly

increased farm productivity.12 Moreover organizational and institutional

reforms involving active participation of the farm households in agricultural

credit, extension, irrigation, water management, rural infrastructure,

marketing, processing, and so on, were an integral part of public investment

in agriculture. Labor and capital transfers occurred from agriculture, while

the real wage remained near constant, throughout the period of

industrialization.


"See Yair Mundlak, Domingo Carvallo, and R. Domenech, Agriculture and
Economic Growth. Argentina 1913-84 (Washington, DC: International Food Policy
Research Institute, 1988).

12See Teng-hui Lee, Intersectoral Capital Flows in the Economic Development
of Taiwan. 1895-1960 (Ithaca and London: Cornell University Press, 1971).







Unlike Taiwan not only do many developing countries experience

government failure, but at the international level too they face major

barriers to trade. International agricultural markets are thin, volatile, and

highly protected. Whereas developing countries have been reducing protection

of their agriculture OECD countries continue to subsidize theirs. Clearly

continued liberalization in developing countries without access to

international markets will not be feasible. We turn to the changing patterns

of international trade to illustrate its growing importance.



PATTERNS OF INTERNATIONAL AGRICULTURAL TRADE BEFORE AND AFTER ADJUSTMENT

Following the severe drought of 1973, the share of developing countries in

world cereal imports climbed at a rapid rate from 37 percent in 1970 to 44

percent in 1980 at a time when oil shocks reduced their capacity to finance

increased food imports. Rising food imports led to a boost to import

substitution of food which in Asia was helped by the Green Revolution. The

rate of growth of cereal imports declined in the 1980s in part due to a robust

agricultural performance in much of Asia which made many importers and food

aid recipients self-sufficient. The debt crisis affected the import capacity

of countries in Latin America and Africa. Nevertheless, by 1990, the share of

developing countries in world cereal imports had increased to 53 percent and

for the first time developing country imports exceeded imports by developed

countries. The shares of both Asia and Africa increased significantly, in the

case of Asia the proportion having increased from a quarter to a third of

global imports, whereas in Africa the share doubled from a low 6 percent to a

little over 12 percent. The behavior of Latin American countries was more

erratic and less homogenous.







The reasons for the increased cereal imports in Asia and Africa

were however radically different. In East Asia (China, Taiwan, South Korea,

Malaysia, Indonesia, Thailand) and to a lesser extent in South Asia (India,

Pakistan, Sri Lanka), imports were the result of increased per capital income,

in turn a result of decline in the rate of growth of population, increased

agricultural productivity, and rapid industrialization. The high income

elasticity of demand for livestock products, edible oils, fruits, and

vegetables and derived demand for feedgrains stimulated growth of imports

which the Asian countries were able to finance through the increased export of

labor intensive manufactured goods. Indeed as Figure 1 shows the share of

agriculture in total exports declined more rapidly and consistently in Asia

where broadbased development of agriculture had received considerable priority

compared to Latin America or Africa where structural barriers (dualism within

agriculture, dependence on a narrow set of commodities for exports and acute

import substituting industrialization) reduced agriculture-industry linkages.

Asia experienced a substantial decline in the proportion of

population below poverty, although South Asia still has the highest incidence

of poverty in absolute terms--some 300 million people as compared to about 120

million in East Asia, 120 million in Sub-Saharan Africa, and 50 million in

Latin America and the Caribbean.13 The proportion of the poor in rural areas

is highest in Sub-Saharan Africa (80-90 percent), followed by South and

Southeast Asia (70-80 percent). In Latin America, the proportion is lower,

varying anywhere from 20-60 percent. Alleviating massive rural poverty is

directly related to the performance of agriculture.



1See World Development Report 1990 (Washington, DC: World Bank, 1990), p.
29.







The doubling of the share of world food imports in Africa reflects

the failure of domestic food production to keep pace with the accelerated rate

of growth of population as well as a rapid shift in the consumption patterns

away from traditional foods such as sorghum, millets and cassava to imported

cereals such as rice, wheat, and maize. Econometric analysis suggests that

declining world cereal prices aided by policies of developed countries,

Africa's overvalued exchange rates, and urbanization were major contributors

to this growth.14

Africa's food aid dependence increased, nevertheless, due to a

limited import capacity to meet the needed food imports. Food aid needs were

estimated to be about 6 million tons in 1991-92 to maintain per capital food

consumption at the 1986-1990 average, but 11.4 million tons if the UN minimum

calorie requirements were to be met. The prevalence of severe and widespread

malnutrition implied in USDA's estimates is also supported by the World Bank's

various reviews of food security in a number of African countries. Both the 6

million and 11.4 million estimates were substantially higher than the 3.5

million tons of food aid actually supplied to Africa (or only about a third of

the total food aid needs). This was a result of logistical problems (lack of

port facilities, fuel, and trucks), economic constraints to the delivery and

absorption of aid, acute needs arising from uneven food needs within

countries, and emergency food aid.15 Since Africa has neither the financial


"See William K. Jaeger, The Effects of Economic Policies on African
Agriculture, World Bank Discussion Paper No. 147, Africa Technical Department
Series (Washington, DC: World Bank, 1992).

5The actual requirements varied considerably among countries. For
instance, whereas Sudan, Somalia, Ethiopia, Liberia, Angola, Mozambique, and
Zaire needed food aid in part due to civil wars or significant political
disruptions, Cote D'Ivoire and Nigeria, neither of which were previously food aid
recipients needed food aid and their requirements were estimated to be

11







nor the logistical capacity to manage food imports or food aid, but has vast

natural resources and a growing population, the importance of increasing food

production there simply cannot be overstated.

Tables 2, 3, 4, and 5 show the growth rates of value added in

agriculture in 53 countries (22 in Africa, 10 in Asia, 7 in Eastern Europe and

the Middle East, and 14 in Latin America) under adjustment for the period 1970

to 1990 as well as for the various sub-periods representing episodes with

regard to external shocks, adjustment etc. Several features about these

tables are of interest. First, rates of growth of value added in agriculture

in Latin America, Asia, and Africa in the 1983-90 period are similar, the

average growth rates being 2.7 in Latin America, 3.0 in Asia, and 3.03 in

Africa annually. There are, of course, the usual expected country

differences, for example, in Asia, the East Asian countries having performed a

lot better than the South Asian countries. However, the differences among

continents are larger when considered in per capital terms. They represent

both lower rates of population growth in Asia and Latin America and high labor

productivity. Table 2 also shows a clear improvement in the rate of growth of

value added in Africa in the 1983 to 1990 period compared to the entire 1970

to 1990 period. Those differences are less significant in Asia and Latin

America, although there is considerable variation among countries in each

region.

This evidence suggests that the favorable impact of structural

adjustment observed by several studies on overall economic and agricultural


considerable (African Food Needs Assessment, USDA Economic Research Service,
November 1991, Washington, D.C.). In Nigeria the ban on commercial food imports
resulted in substitution of domestic sorghum, millets, and cassava for imported
cereals for rice, wheat and maize. But the opposite was the case in a number of
countries where food aid consisted of these cereals.

12







growth reviewed later is perhaps more noticeable in African agriculture, and

perhaps because price distortions prior to adjustment were more acute in the

African economies than in Asian agriculture where distortions were lower, but

the reforms have been perhaps slower as well.16 China is the notable

exception where a major land reform (the so-called shift to the personal

responsibility system) and liberalization of the cereal market provided a

major boost to agriculture. Yet China's agriculture remains more controlled

today (with 20 percent of cereal production sold to the public sector at a

fixed price and another 60 percent sold to the government at a negotiated

price, compared to 10 percent in India and a similar percentage share in

Tanzania at the peak of interventions). Clearly it is not simply the

liberalization of the grain market or the land reform which explains China's

better agricultural performance. A great deal of government behavior remains

a puzzle, especially in terms of the lessons developing countries should learn

from China and other well performing East Asian countries. Evidence also

shows that the response of overall economies to structural adjustment has been

more impressive in the middle income countries than in Africa. It is to this

puzzle that we now turn.




16See Adjustment Lending: An Evaluation of Ten Years of Experience, Policy
and Research Series No. 1, Country Economics Department (Washington, DC: World
Bank, 1989); Adjustment Lending Policies for Sustainable Growth, Policy and
Research Series No. 14, Country Economics Department (Washington, DC: World Bank,
1989; Africa's Adjustment and Growth in the 1980s, the World Bank and UNDP
(Washington, DC: World Bank, 1989); and Riccardo Faini, "Infrastructure, Relative
Prices, and Structural Adjustment," in Ian Goldin and L. Alan Winters eds. Open
Economies: Structural Adjustment and Agriculture OECD Development Centre and the
Centre for Economic Policy Research (Cambridge: Cambridge University Press,
1992).








When the real growth rates of total agricultural exports (nominal

dollar values of total agricultural exports deflated by the international MUV

index) are considered, the majority of 53 developing countries experienced a

decline in their import capacity in the 1983 to 1990 period relative to the

entire 1970 to 1990 period (Tables 6,7,8, and 9). But the decline in import

capacity was greater for Africa than Asia, perhaps reflecting greater terms of

trade effects because of Africa's greater concentration in a few agricultural

exports with low income elasticities of demand for its exports. More is said

on the international demand issues below. Africa showed gains in import

capacity (i.e. smaller negative values) in the 1983 to 1990 period compared to

the 1978 to 1981 period of acute economic crisis, perhaps suggesting increased

export volume effect following structural adjustment in the later period.

While still highly tentative, these results are of considerable

interest in understanding the process of economic development in the two sets

of countries. First, due to growth in factor productivity, there was greater

per capital accumulation of surplus which was ploughed back by the public

sector into agriculture in Asia leading to a cumulative income growth compared

to Africa. Second, due to a smaller share of agricultural exports in total

exports and a greater diversity in those exports, Asia suffered a lower

overall loss in income from adverse international terms of trade. However,

importantly, when the external environment turned unfavorable in the 1980s

Asian countries were more able to turn to the domestic market for a stimulus

to their economies than was Africa.17

Changing patterns of global fertilizer (nutrient) consumption also



17Based on Recent Economic Developments, various country reports prepared
by the IMF.






reflect important differences in the rates of agricultural intensification in

the two continents. Whereas Asia's share in global fertilizer consumption

increased dramatically from 14 percent in 1970-71 to 36 percent in 1989-90, in

the case of Africa, the growth according to FAO data was a mere 2.4 percent to

2.7 percent. Thus, Africa's share in world fertilizer consumption declined

significantly.

Through the flows of external finance industrial country policies

determine the extent to which developing countries can supplement their

domestic investment effort including import of critical agricultural inputs.

This is more true of small, low-income open economies of Africa than the large

economies of Asia or Latin America. African countries receive more official

development assistance (both in per capital terms, as well as share of

government expenditures and GNP which is as high as 20 percent in many

countries) relative to large Asian countries, although later we will show the

effects of external finance on public investment in Asia as well. Donor

financed imports of fertilizers on which much of Africa depends have shown

great year to year variability due to its inevitable unpredictability.

Adjustment loans which focus on liberalization of imports and domestic markets

in fertilizers in circumstances of scarce foreign exchange have not focused

adequately on the effects of donor policies towards financing fertilizer

imports.18






18See Uma Lele and Robert Christiansen, "Markets, Marketing Boards, and
Cooperatives in the MADIA Countries: Issues in Adjustment Policy in Africa,"
MADIA Discussion Paper No. 11 (Washington, DC: World Bank, 1989); Uma Lele, ed.
Aid to African Agriculture: Lessons from Two Decades of Donor Experience
(Baltimore: Johns Hopkins University Press for the World Bank, 1992).

15







THE IMPACT OF ADJUSTMENT ON AGRICULTURE

The preceding discussion demonstrates that it is difficult to separate the

effects of increased availability of foreign exchange and access to imported

inputs from that of improved price incentives and investment climate or

external shocks such as terms of trade changes or the weather. Adjustment

studies tend to compare "before" and "after" adjustment situations because of

the difficulty of determining the "without adjustment" situation. Decline in

real incomes following adjustment may reduce demand for food commodities and

shift relative output prices in favor of export crops. Not only may the

output prices of the large foodcrop sector be more cushioned from

international markets, but the foodcrop sector may even be adversely affected

by the various other price reforms (for example, increase in the prices of

inputs due to devaluation, removal of subsidies, and increased internal

transport costs). But it may not benefit much from output price increases

(which notwithstanding a government monopoly in effect may be uncontrolled to

begin with or may lose their price support).

Studies of adjustment show that after controlling for the effects

of external shocks and external finance, adjusting countries have performed

better than nonadjusting countries, and those early adjusting countries with

three or more loans performed better than those with fewer loans.19 Not

surprisingly countries with a dominant manufacturing sector mostly in Asia,

North Africa, and the Middle East performed better than those with a dominant

agricultural sector. Adjustment has been relatively less successful in highly

indebted countries in Latin America and in Africa--not a surprising finding in


"1See Vittorio Corbo, Stanley Fischer, and Steven B. Webb, Adjustment
Lending Revisited: Policies to Restore Growth (Washington, DC: World Bank, 1992).







view of the preceding discussion.20,21


According to Faini's econometric study of 30 countries, which

specifically analyses effects of adjustment on agriculture, the agricultural

sectors of adjusting countries responded positively.22 Importantly, Faini

also shows that while both price factors and the availability of

infrastructure were significant, price factors were more significant than



20Conclusions of the two reviews of adjustment lending carried out in the
World Bank (Adjustment Lending: An Evaluation of Ten Years of Experience and
Adjustment Lending Policies for Sustainable Growth) were that: the 30 countries
that received adjustment lending before 1985 had higher rates of economic
performance than the 63 that did not receive the loans. Performance of the 12
countries that received three or more loans and that were substantial exporters
of manufactured goods was much better. Adjustment lending has been relatively
less successful in highly indebted countries in Sub-Saharan Africa. The second
review adjusted for the effects of initial conditions, external shocks, and the
amount of external financing. It concluded that early intensive adjustment
lending countries (EIAL) experienced larger increase in the average rate of
growth of GNP than did other countries. Thus, Korea, Mauritius, Morocco, Ghana,
and Thailand appeared to have stimulated growth more than the initial conditions,
external shocks, and external financing would suggest. Exports as a share of GDP
in constant prices increased a lot in these countries. But the picture was less
positive in Nigeria, the Philippines, Malawi, Cote D'Ivoire, and Mexico (although
the situation regarding Mexico has changed since the studies were done). The
picture has been less positive in the case of EIAL countries. After adjusting
for these same conditions both private and public investment fell in EIAL
countries. The Bank's conclusions on the impact on the poor are more contrived.
"---orderly adjustment supported by Bank lending seems to have been less costly
for most of the poor and for the general populace than disorderly adjustment
without Bank support was" (see Corbo, Fischer, Webb, eds. Adjustment Lending
Revisited, p.14). The relationship of adjustment to social indicators is less
clear, but government expenditures on social sectors declined in most countries,
leading to a drop in primary school enrollment. Adjustment is taking longer than
expected and most Bank documents are placing greater emphasis on a detailed
analysis of the social impact, including reallocation of services to the poor,
severance payments, and retraining of unemployed workers but most of these are
geared to urban workers.

21Conclusions of the two review of adjustment lending carried out in the
World Bank.


22See Riccardo Faini, "Infrastructure, Relative Prices, and Structural
Adjustment," in Ian Goldin and L. Alan Winters eds. Open Economies.







infrastructure in middle-income countries where manufacturing dominated and

where presumably markets worked better. The effect of public infrastructure

was stronger in countries where agricultural exports dominated, i.e., in low-

income (African) countries where accumulated deterioration of physical capital

is now acute and a serious constraint to the functioning of factor and product

markets. But due to data problems, econometric studies do not make a

distinction between adjustment in the macro economy and in the agricultural

sector. Thus, while in the literature on adjustment export crop prices faced

by producers are assumed automatically to have increased following

devaluations, in reality gains may not always accrue to producers. Tanzania

is justifiably credited with a major macroeconomic adjustment but wrongly

considered a success in export performance. By 1992, only cotton production

had increased.23 But it faced major problems in transportation and

processing. All other export crops had stagnated because gains from a large

devaluation had been absorbed mainly by the financially strapped parastatals

who also received the lion's share of credit from the banking sector. IMF-

imposed credit ceilings which were necessary to control inflation nevertheless

caused a major credit crunch in the informal sector which affected the

functioning of agricultural markets.24 In Malawi, for nearly 20 years the

government has continued its discriminatory low prices to small farmers

growing tobacco while favoring estates and adjustment for nearly a decade had



23See Adjustment Lending: An Evaluation of Ten Years of Experience.


24See Uma Lele, "Can Technology Transfer and Macroeconomic Adjustment
Sustain Africa's Agricultural Revolution Without an Agricultural Sector Strategy?
The Case of Sasakawa Global 2000 Program in Tanzania," An impact evaluation
report prepared for the Sasakawa Global 2000 program (University of Florida,
Gainesville: International Studies and Programs Office, 1992).

18







not changed that state of affairs. In Kenya, although prices of the two major

exports tea and coffee never experienced much (implicit or explicit) taxation,

agricultural adjustment had not changed the character of the price policy much

by 1991. Maize marketing had been liberalized partially in Kenya and fully in

Tanzania. This greatly increased the producers options as regards marketing

channels and helped reduce parastatal losses, but did not necessarily increase

producer price levels. Input prices, however, increased sharply in all these

countries. Declining international prices of both food and export crops in

the 1980s, added to the squeeze on agriculture.

The problem is of course more acute in CFA countries. In the

World Bank sponsored study Managing Agricultural Development in Africa (MADIA)

I had documented that the relative producer prices of export crops were

already less favorable to their production in West Africa in the 1970s vis a

vis food crops especially compared to East Africa. Thus, whereas the ratio of

the coffee price to the maize price was nearly 45 to 1 in Kenya in 1977, i.e.,

at the height of the coffee boom, it was only 7 to 1 in Cameroon. This

reflected both the higher explicit and implicit tax on coffee in Cameroon as

well as the higher price of maize relative to Kenya (reflecting the higher

level of urbanization aided by the effects of the oil boom). The relative

disadvantage of export crops is even more pronounced in CFA countries since

1987 due to the increased overvaluation of the exchange rate and the decline

in nominal producer prices of export crops required to balance the books of

parastatals. The problem of CFA countries has been made more acute by the

large devaluations in the neighboring countries. Clearly while the Franc zone

has a number of advantages in terms of greater price stability and monetary

discipline, its desirability from the viewpoint of competitiveness of








agriculture needs reevaluation.

We will later return to the other agricultural development policy

issues faced in transition during adjustment.



DECLINING INVESTMENTS IN AGRICULTURE

The focus in adjustment programs has been more on price policies and short run

changes than on investments, institutions, human capital, or technology

development. Such focus may be explained by the relative ease in changing

nominal prices than in reforming parastatals, strengthening agricultural

research systems, building and maintaining a feeder road network, or changing

investment patterns away from the urban sectors, tasks that earlier project

lending undertook. Second, the difficulty in monitoring non-price reforms

adds to the temptation to focus on prices. Third, the greater location-

specific knowledge of developing countries needed to recommend public

investment reforms adds to the problem of donors giving advice since most of

the staff are located in the capital cities of donor countries. Fourth,

prices are more easily amenable to analytical tools of neoclassical economic

theory than government expenditures, institutional changes, or technologies.

Finally, the importance of macroeconomics has increased in the course of

structural adjustment with a concomitant decline in the role of sector

economists and, even more important, other technical fields critical for the

development of agriculture. Table 10 shows the effect of this phenomenon on

the composition of 198 recent publications on structural adjustment. They

reflect the bias towards macro economic analysis, middle income countries, and

poverty relative to agriculture. Publications on poverty alleviation often

have little treatment of agriculture. Africa has relatively more publications







on agriculture than Asia, but the exclusive focus on Africa adds less new

insights than would be possible from a more comparative effort to learn

lessons from continents where agriculture has been more dynamic, but where

governments have played an important role.

Excesses of the 1970s in terms of rapid expansion of public

investments in the absence a conducive policy and institutional environment,

however, have also demonstrated that equating increased investment with

priority to agriculture (or industry) is not justified. Nevertheless an

important indicator of the decline in interest in agriculture is the reduced

public sector investment in agriculture, being noted in many developing

countries although investment requirements of agriculture remain very

large.25 That decline in agricultural investments seems to be part of a

general decline in rates of investment being noted even in adjusting countries

that have considerable access to external finance.26 With lesser access to

external finance the decline in investment in non-adjusting countries must of

course be greater. This can be seen from Table 11 which also shows that the

decline in the rates of public investment are greater in Africa than in Asia

and Latin America. The declining share of external assistance to agriculture

has of course reinforced the tendency for decline in public sector investments

in agriculture of developing countries.


25FAO has estimated total investment requirements of agriculture to be
about $1500 billion by year 2000 or about 80 to 100 billion annually and the
Bank's agricultural staff seem to accept these estimates. Changes in lending in
only a handful of countries where lending to agriculture has traditionally been
concentrated explains the decline in the Bank's lending. For detailed evidence
supporting the arguments in the text, see Lele, Adu-Nyako, and Emerson,
"Structural Adjustment and Agriculture," forthcoming.

26See Corbo, Fischer, and Webb, Adjustment Lending Revisited.







The World Bank reviews of adjustment lending have justifiably

argued that since growth in adjusting countries has been higher than it would

have otherwise been, even with reduced levels of investment, factor efficiency

must have increased.27 Certainly reducing price distortions must have had a

positive effect on efficiency. But such efficiency augmenting effect of price

reforms tends to be a once and for all increase. Long term increases in

output must come from increase in investment in research, extension,

education, health, transport, etc.

The World Bank's lending to agriculture is a significant barometer

of the overall financing by other donors since they typically follow similar

patterns, and co-financing with the Bank has increased after structural

adjustment commenced.

Figures 2, 3, 4, 5, and 6 show World Bank lending to agriculture

relative to SAL lending and overall lending in the principal regions of the

world. The share of agriculture in the total declined from about 31 percent

in 1975 to less than 18 percent in 1990. The share of structural adjustment

lending in the total increased from about 9 percent to nearly 15 percent over

the same period. Increased adjustment lending of course helps the development

of agriculture not simply through the removal of macro price distortions but

through the increased availability of consumer goods, spare parts, and

agricultural inputs. World Bank reports are at pains to stress that many of

the changes that have caused the decline in the share of lending are

associated with a desire to improve the performance of the agricultural sector

rather than a result of its neglect or abandon.


27See Corbo, Fischer, and Webb, Adjustment Lending Revisited.







The decline in agriculture's share in World Bank lending has been

more evident in Asia and Africa where it reached its peak in the late 1970s

although there are important intercountry differences within regions. The

decline in the Middle East, North Africa, and the European region has been

less significant and overall lending actually increased in Latin America in

the 1980s after declining until 1978, although once again there are country

differences. Since only six countries (Brazil, China, India, Indonesia,

Mexico, Pakistan, and Turkey) received nearly two thirds of total World Bank

lending to agriculture changes in assistance to them offer a number of

insights. While it is difficult to generalize on the precise patterns, in

countries where the World Bank had a substantial presence in agriculture in

the 1970s, and familiarity with the problems of agriculture, lending declined

although the quality of the countries' overall agricultural performance or the

quality of the Bank's lending portfolio in these countries was not necessarily

poor.28 In some countries, however, the World Bank's own portfolio selection

did not reflect the best opportunities for investment, as, for example, in

Kenya where the country's performance was much superior to that of the Bank's

portfolio.29


28For instance lending declined sharply in India, Indonesia, Mexico, and
Nigeria (the only poor performing country) but increased sharply in China and
Brazil (a country that failed to adjust). The trends were more mixed in Morocco
and Turkey (both of whom were successful adjusters). There it increased in the
mid 1980s after having declined before. Among the smaller borrowers lending also
declined in Tanzania, Kenya, Malawi, Malaysia, Philippines, Korea, Bangladesh and
Rumania, but increased in Sudan (a country devastated by civil war and other
political problems) and Tunisia. Lending remained high cut declined slightly in
Sri Lanka and Cameroon.

2"It could justifiably be argued that donors should be willing to take risks
and finance marginal investments unlikely .to be funded by countries. But this
would require greater explicit recognition of the lack of knowledge of precise
local constraints, an experimental approach to addressing them, and flexibility
in learning by doing. Whereas these principles are simple enough (see Uma Lele,

23









CAUSES OF REDUCED INVESTMENT IN AGRICULTURE

The waning interest in agriculture is a result of a complex set of interacting

factors. Of course, the pressing foreign exchange needs of developing

countries following the economic difficulties at the end of the 1970s

contributed to the focus away from investment projects. Increased scrutiny of

aid agencies by their constituencies in terms of the efficiency of staff

resources and the consequent pressure to lend more funds with less staff has

reinforced the support for balance of payments over investment projects. But

there have also been other factors more specific to agriculture. First,

hunger has been perceived to be the result of a lack of effective demand

rather than inadequate supply.30 Therefore emphasis has shifted from

production to consumption. While this conclusion is justified at both the

international and the national levels, it is an oversimplification of a

complex problem in which employment opportunities in agriculture and related

fields clearly determine the ability of the rural poor to earn income. In

Africa, the failure of the plethora of integrated rural development projects

in the 1970s has led to a shift out of agriculture.31 If ex-post returns

calculated in all sectors by the Operational Evaluation Department of the


The Design of Rural Development: Lessons from Africa, Baltimore: The Johns
Hopkins University Press for the World Bank, 1975) donors have shown a tendency
to finance large projects of inappropriate technology with less flexibility in
changing course during the period of implementation when problems occur. But
this is not a problem specific to agriculture. See Uma Lele and L. Richard
Meyers, "Growth and Structural Change in East Africa: Domestic Policies,
Agricultural Performance, and World Bank Assistance," MADIA Discussion Paper 3
(Washington, DC: World Bank, 1989).

30See Jean Dreze and Amartya K. Sen, Hunger and Public Action (Oxford:
Clarendon Press, 1989).

31See Uma Lele, ed. Aid to African Agriculture.

24







World Bank are taken at their face value ex-post returns in agriculture were

lower relative to ex-ante returns than in other sectors.32 Clearly too high

a set of expectations by donors in the 1970s have inadvertently contributed to

turning attention away from agriculture. Within agriculture the Bank's

emphasis on national agricultural services in Africa effectively focuses on

agricultural extension when the challenge of intensifying agriculture requires

investment in agricultural research, small-scale irrigation, feeder roads,

fertilizer imports and distribution, agricultural finance, and a price policy,

including, where appropriate, a selective application of subsidies. Recently

concerns about the environment, poverty, and women's participation have taken

precedence over agriculture.

In Asia, decline in world cereal prices reduced economic

justification for investment in irrigation. Increased salinity and

displacement of traditional populations in large-scale irrigation projects

reduced donor enthusiasm for financing irrigation in the face of growing

criticism from environmentalists. Similarly, the lack of popular support in

donor countries for the use of chemical inputs has reduced interest in

projects involving fertilizers.

Donors also relied heavily on public sector enterprises as a major

conduit for transfer of resources to agriculture. Indeed, elsewhere I have

documented that the rapid growth of public enterprises noted in many small

developing countries simply would not have occurred without external

assistance (Lele and Christiansen). The loss of credibility of the public



32See Gerhard Pohl and Dubravko Mihaljek, "Project Evaluation and
Uncertainty in Projects: A Statistical Analysis of Rate-of-Return Divergences of
1,015 World Bank Projects," in The World Bank Economic Review, Vol. 6, No. 2, May
1992 (pp.255-78).







sector and the increased role assigned to the private and the nongovernmental

sectors have made it difficult to channel substantial resources to the

agricultural sector, although some resources are being provided to private

traders to promote input and output marketing and to NGOs. There is a danger

that the capacity of local NGOs to utilize resources effectively is outpaced

by the number of donors and the volume of resources available to assist them.

That may be harmful to the sustainability of genuine local NGOs. The

widespread growth of rural development funds being noted in many countries

while agricultural investments decline may similarly turn out to be a flash in

the pan that keeps the existing governments in power, but does little to

improve the capacity of the line ministries to perform their legitimate

development functions, unless of course local communities are truly empowered.

To illustrate the complex policy problems faced by the line ministries and

agencies concerned with agricultural development, I end this paper by

highlighting several sector policy issues faced in adjustment.



AGRICULTURAL SECTOR POLICY ISSUES IN ADJUSTMENT



The Fallacy of Composition Argument (Again?)

Low demand elasticities for tea, coffee and cocoa continue to pose a problem

for its producers as a group although individual countries that have not

discriminated against the export crop sector have performed better than those

that did.33 The problem of fallacy of composition is more acute for African

countries with a narrow base of exports and fewer options for diversification


3See Uma Lele, "Agricultural Growth, Domestic Policies, the External
Environment, and Assistance to Africa: Lessons of a Quarter Century," MADIA
Discussion Paper No. 1 (Washington, DC: World Bank, 1989).

26







sector and the increased role assigned to the private and the nongovernmental

sectors have made it difficult to channel substantial resources to the

agricultural sector, although some resources are being provided to private

traders to promote input and output marketing and to NGOs. There is a danger

that the capacity of local NGOs to utilize resources effectively is outpaced

by the number of donors and the volume of resources available to assist them.

That may be harmful to the sustainability of genuine local NGOs. The

widespread growth of rural development funds being noted in many countries

while agricultural investments decline may similarly turn out to be a flash in

the pan that keeps the existing governments in power, but does little to

improve the capacity of the line ministries to perform their legitimate

development functions, unless of course local communities are truly empowered.

To illustrate the complex policy problems faced by the line ministries and

agencies concerned with agricultural development, I end this paper by

highlighting several sector policy issues faced in adjustment.



AGRICULTURAL SECTOR POLICY ISSUES IN ADJUSTMENT



The Fallacy of Composition Argument (Again?)

Low demand elasticities for tea, coffee and cocoa continue to pose a problem

for its producers as a group although individual countries that have not

discriminated against the export crop sector have performed better than those

that did.33 The problem of fallacy of composition is more acute for African

countries with a narrow base of exports and fewer options for diversification


3See Uma Lele, "Agricultural Growth, Domestic Policies, the External
Environment, and Assistance to Africa: Lessons of a Quarter Century," MADIA
Discussion Paper No. 1 (Washington, DC: World Bank, 1989).

26






than their Asian and Latin American counterparts who have gained their shares.

In a recent cross-sectional study, Evans, Goldin, and van der Mensbrugghe show

that an across-the-board tax cut by several small producers of export crops

with limited demand will result in a substantial loss of GDP.34 Panagariya

and Schiff also show that optimal choice of taxes or quotas and the associated

growth in the country's output can lead to a decline in the combined real

income of the exporting countries.35 Whereas cross-sectional analysis and

game theoretic approaches have their own limitations, they do reflect the

donors' long-standing dilemma in Africa. It is clear that Africa must compete

in the production of these crops, by bringing down the cost of its own

production so as to make it unattractive for its competitors to remain in

production. However, productivity growth has been more rapid in Malaysia than

in Cameroon, Nigeria, or Cote d'Ivoire. Apart from price incentives, neglect

of agricultural research, extension, credit, and inputs has been a

particularly acute problem in African countries with a few exceptions such as

Kenya or Zimbabwe. Malaysia, which borrowed oil palm and cocoa technology

from Nigeria, by contrast, has excelled in these respects. Despite higher

nominal wages, it has had lower unit costs of production. Devaluations in

Africa have improved competitiveness but in the absence of technical progress

devaluations have caused a decline in real wages.

Since the early 1970s, donors have not helped in Africa's



34See David Evans, Ian Goldin, and Dominique van der Mensbrugghe, "Trade
Reform and the Small Country Assumption," in Ian Goldin and L. Alan Winters eds.
Open Economies.


"See Arvind Panagariya and Maurice Schiff, "Taxes versus Quotas: The Case
of Cocoa Exports," in Goldin and Winters, eds. Open Economies.







declining export crop sector. They advised African countries to limit their

traditional exports. For example, in 1973 the World Bank, based on an FAO

study, adopted a policy not to finance expansion of tea and coffee production-

-although when it did assist in processing in Kenya, it contributed much to

Kenya's excellent tea industry. The EC's position has vacillated. The price

policy advice the World Bank and other donors provide under adjustment lending

is correctly to encourage producing countries to reduce the level of implicit

and explicit taxation, although the Bank has not changed its policy towards

financing investments in production.

On the whole donors have swung between export promotion and food

security rather than providing sound advice and investment support for

efficient production of both. Due to Africa's greater dependence on external

advice and capital for financing investments relative to Asia or Latin America

it was the loser in the world market shares which the latter two continents

gained. Clearly donors will need to assist Africa to diversify out of its

traditional exports without discriminating against them. Countries such as

Malaysia have much that they can re-export to Africa in terms of the

organization of research, extension, agricultural finance, and rural

infrastructure.



Price Stabilization

Virtually every country in the world attempts to stabilize prices both to

cushion consumers, processors, and producers from the extreme vagaries of

international price fluctuations as well as to stabilize prices across regions

and seasons. Many governments have a monopoly on domestic procurement as well

as on exports and imports, and use quantitative restrictions or tariffs. Most







have domestic buffer stocks together with policies of domestic purchases and

sales. Marketing boards are another mechanism for stabilization and variable

tax is used in several countries.

Clearly the private sector does not indulge in these operations

since they are not profitable. Thus some cost to the government to meet

welfare, political, and economic objectives is unavoidable. The criticisms of

these schemes have been that public sector operations are inefficient, benefit

undeserving groups, have high monetary and fiscal consequences, misallocate

factors of production, thwart the growth of private enterprise etc. Depending

on whether the high operating costs and subsidies of marketing organizations

are financed through the budget or the expansion of credit by commercial banks

(which is not repaid) the monetary and fiscal costs of these interventions can

be very high indeed.

The World Bank's advice to governments, correctly, has been to: a)

avoid getting involved in internal or external trade directly rather than

using trade based mechanisms including in the case of tradeable goods by

relying on a variable levy and market forces; b) to stabilize prices only

partially by setting rather wide price bands as net costs to the government

are directly related to the extent of price stabilization; c) to the extent

possible to relate prices to international prices; d) to protect only the

vulnerable groups.

While these principles are undisputable, the difficult problems

relate to the transition from a controlled to a partially controlled system.

There are many empirical issues which have not yet been fully explored through

research. First, in the absence of capacity of governments to regulate the

liberalized markets, the predatory behavior now attributed to public agencies








may be replaced by that of an oligopolistic private sector. Especially in the

absence of competitive goods markets and a severe credit crunch, hurriedly

instituted price policy reforms do not always achieve their intended effects.

In Kenya, for example, "liberalization" of wheat imports (which were the

monopoly of the much criticized maize board) resulted in the government

allocating import licences to a favored few. This shifted the profits used to

cross-subsidize maize operations (ostensibly for the benefit of urban

consumers) by the maize board to the already well-off, including some

politicians. The same phenomenon has been noted in Senegal with regard to the

allocation of import licences for rice36 and in Nigeria. Indeed, the

government of President Babangida in Nigeria acquired considerable popularity

by vowing to ban rice imports, among other things, because of the public's

recognition that a few army generals were the major beneficiaries of import

licenses issued during the oil boom37 and a concern that import

liberalization would once again transfer rents to them instead of the

producers who would respond to higher prices by increased domestic production.

By all accounts, import controls have shifted Nigerian food habits to their

traditional foods such as plantains, cassava, etc. Raising food prices caused

a considerable supply response, although high prices are detrimental to

consumers. Nigeria is developing a capacity to diversify its exports out of

oil so as to finance increased food imports. The policy of phased

liberalization of imports is one which East Asian countries have followed


36See John Waterbury, "Agricultural Policymaking and Stagnation in Senegal,"
MADIA Working Paper, Africa Technical Department, Agriculture Division
(Washington, DC: World Bank, revised 1990).

37See Henry Bienen, "Politics and Agricultural Policy in Nigeria," MADIA
Working Paper, Africa Technical Department, Agriculture Division (Washington, DC:
World Bank, revised 1990).







effectively. The needs of the export sectors were given priority over those

which competed with domestic production and consumption. In that vein,

Africa, which has become a major importer of canned foods, livestock, and

dairy products, may benefit from some protection for its domestic food

production, provided it is for a limited period of time and is associated with

effective government policy to increase competitiveness, particularly in view

of the continued subsidies in OECD countries.

Similarly domestic grain markets are not competitive in many

developing countries especially where governments have suppressed private

activity over a long period, for example, in Russia as much as in Tanzania.

The severe deterioration of physical infrastructure combined with a lack of

information, transport, credit, etc. compounds the problem of lack of

competitiveness. Clearly, steps need to be taken to increase competition,

including especially massive investments in rural feeder roads. But

infrastructure development cannot occur overnight and certainly not in a

situation of declining rates of public and donor investments. Much of initial

increase in investments in physical infrastructure in Africa, where the need

is greatest, focused on ports and trunk routes. This is not simply a result

of a continued urban bias but also reflects an extreme weakening of local and

regional governments and a weak private contracting sector. The problem of

inadequate rural infrastructure confronts China, East Asia, and South Asia as

well.38

Furthermore, even competitive markets do not necessarily mean

stable domestic prices in the presence of unstable production. Unavailability


3See Uma Lele," Can Technology Transfer and Macroeconomic Adjustment
sustain Africa's Agricultural Revolution Without An Agricultural Sector
Strategy?".








of foreign exchange or food aid to stabilize domestic supplies clearly

constrains Africa much more than Asia or Latin America, and this should have

some effect on the donors advice on import reliance.

Some price stability is essential to protect the consumption and

income of the poor who spend a large share of their income on food. A slow

recognition of this fact by the IMF and the World Bank is leading them to

develop safety nets through more fine-tuned and targeted food subsidies and

this is a development in the right direction. However, there are several ways

in which this approach need to be strengthened. First, due to a lack of

knowledge of rural areas, adjustment literature frequently ascertains that all

rural households are net sellers of food and assumes that adjustment of

exchange rates and high food prices will benefit them. The safety nets focus

on the urban poor and ignore the large numbers of the rural poor that have

become market dependent throughout the world. Indeed the rural poor are even

more vulnerable than their urban counterpart due to their dispersed nature and

weak political voice. Second, the timing of liberalization often overlooks

the government's capacity to sustain the liberalized market through release of

adequate food supplies to dampen prices and avoid further speculation. In

some cases, the timing of liberalization has been inopportune, as for example

in the years of drought, with the lack of food aid or foreign exchange to

import food. Third, the focus on consumer subsidies is leading donors to

overlook the need for some assurance of minimum prices to producers (perhaps

by linking them to a moving average of projected international prices to avoid

much protection). Such absence of a producer orientation in price policy

advice is a more serious problem in Africa with its poor infrastructure, weak

private sector, large internal transportation costs and high price bands.







With all their high fixed and monetary costs, public purchases in domestic

markets greatly helped in integrating national markets. Due to their greater

leverage (but a lack of practical experience or knowledge of public policy)

donors have succeeded in dismantling government interventions to a greater

extent in Africa than in Asia where governments still exercise considerable

role in stabilizing supplies and prices within and across years, as seen from

the contrasting examples of China and Tanzania. China's major land reform

after the communist takeover greatly improved rural land distribution and

reduced the need for food distribution. Is reducing public food distribution

in rural areas the only solution or is there some scope for increasing public

sector efficiency and accountability? In discussing the maize price reforms

in Zambia, Gulhati has stressed the complexity of the cereal price reform, the

lack of information and expertise in donor agencies or governments, and the

need for greater political and welfare sensitivity.39



Fertilizer Subsidies

The issue of fertilizer subsidies is particularly pertinent in the context of

food security. As in the case of price stabilization, fertilizer subsidies

are justifiably being removed because the gains from low prices mainly accrue

to middlemen and commercial farmers, administration of subsidies makes it

difficult to open up the fertilizer trade to the private sector, and the

budget constraint unnecessarily rations the supply and leads to shortages and

black markets. These various effects are clearly contrary to those intended.

Yet Lele, Christiansen, and Kadiresan have shown that issues related to



3"See Ravi Gulhati, The Making of Economic Policy in Africa (Washington, DC:
World Bank, Economic Development Institute, 1990).

33







fertilizer use in rainfed production involve complex and location-specific

interactions of technical and economic factors in a situation of inadequate

research, poor informational base, high risks, and uncertainty.40 Fertilizer

subsidies may be essential for: (a) households in marginal areas or where

fertilizer response coefficients are low, transport costs are high, demand for

fertilizers is highly variable and unpredictable due to climatic factors, the

private sector does not have the incentive to develop the market, and it is

cheaper to provide a subsidy on transportation costs related to fertilizer

distribution (thereby also ensuring scope for private sector sales at the

regional level and below) than to distribute food to achieve food security of

rural households consistently vulnerable to food shortages. A regular public

presence in rural areas in various forms enables the successful use of

administrative machinery in periods of drought, as demonstrated on several

occasions in India and Kenya.

Clearly, effective location-specific agricultural research that

increases factor productivity will reduce the need for input subsidies. But

agricultural research has typically been underfunded despite consistent

evidence of high rates of return. The allocation of funding to national

agricultural research has taken a heavy toll since the adjustment process

began, in part due to a weak constituency for agricultural research even under

the best of circumstances. Moreover, the quality of management of the

existing resources to research is declining with resources being devoted to

rapidly declining real salaries and few being allocated for operations and

maintenance.


40See Uma Lele, Robert Christiansen, and Kundhavi Kadiresan, "Fertilizer
Policy in Africa: Lessons from Development Programs and Adjustment Lending, 1970-
87," MADIA Discussion Paper 5 (Washington, DC: World Bank, 1989).

34






Employment and Income Effects

Regional income and employment shifts of trade liberalization also pose short-

run problems, although liberalization has a positive, long run effect as shown

in Mexico. Despite large overall welfare gains, Levy and Wijnbergen argue for

a gradual introduction of the North American free-trade agreement to allow the

time for adjustment in peasant households (with little access to formal

education) in southern Mexico."1 They may be unable to obtain employment in

manufacturing and high value commercial agriculture in Northern Mexico that

will be the primary beneficiary of trade liberalization. Levy and Wijnbergen

acknowledge the lack of understanding of the functioning of labor markets and

rural-urban migration.



Agricultural Credit

Asymmetries in the allocation of capital raise similar issues with regard to

agricultural credit. The financing requirements of a dynamic agriculture can

be very large in macroeconomic terms. Yet, the Philippines agriculture

presents the general prototype noted in developing countries with an average

share of agriculture in GDP of 30 percent in the period 1966-1984, but

agriculture accounting for only 8 percent of the share of formal credit.42

In urban areas large commercial and industrial firms are the main

beneficiaries of credit. Within agriculture, the size preference of lenders



41See Santiago Levy and Sweder van Wijnbergen, "Agricultural Adjustment and
the Mexico-USA Free Trade Agreement," in Ian Goldin and L. Alan Winters eds. Open
Economies.


42See Sagrario L. Floro and Pan A. Yotopoulos, Informal Credit Markets and
the New Institutional Economics: The Case of Philippine Agriculture (Boulder, CO:
Westview Press, 1991).






Employment and Income Effects

Regional income and employment shifts of trade liberalization also pose short-

run problems, although liberalization has a positive, long run effect as shown

in Mexico. Despite large overall welfare gains, Levy and Wijnbergen argue for

a gradual introduction of the North American free-trade agreement to allow the

time for adjustment in peasant households (with little access to formal

education) in southern Mexico."1 They may be unable to obtain employment in

manufacturing and high value commercial agriculture in Northern Mexico that

will be the primary beneficiary of trade liberalization. Levy and Wijnbergen

acknowledge the lack of understanding of the functioning of labor markets and

rural-urban migration.



Agricultural Credit

Asymmetries in the allocation of capital raise similar issues with regard to

agricultural credit. The financing requirements of a dynamic agriculture can

be very large in macroeconomic terms. Yet, the Philippines agriculture

presents the general prototype noted in developing countries with an average

share of agriculture in GDP of 30 percent in the period 1966-1984, but

agriculture accounting for only 8 percent of the share of formal credit.42

In urban areas large commercial and industrial firms are the main

beneficiaries of credit. Within agriculture, the size preference of lenders



41See Santiago Levy and Sweder van Wijnbergen, "Agricultural Adjustment and
the Mexico-USA Free Trade Agreement," in Ian Goldin and L. Alan Winters eds. Open
Economies.


42See Sagrario L. Floro and Pan A. Yotopoulos, Informal Credit Markets and
the New Institutional Economics: The Case of Philippine Agriculture (Boulder, CO:
Westview Press, 1991).







is again visible. The sectoral allocation of credit favors export and

commercial crops. The government institutions tend to reach clients who

easily meet the bankability criteria whereas the informal market serves the

clients whose risk in repayment is greater, and where the formal sector is not

likely to venture.

In the context of adjustment, these patterns of credit allocation

have been associated with urban bias, financial repression, and overt

government acts such as regulation of financial intermediaries, control of

interest rates, and government intervention in the credit market. While these

are justified concerns they result in an excessive emphasis on adjustment of

interest rates and overlook the large institutional and infrastructural gaps

that cause fragmented credit markets.

Floro and Yotopolous demonstrate the fragmentation of credit

markets in the Philippines dictated by the current nature of the economic

environment and the existence of a great variety of interest rates, i.e.,

interest rates being lower for linked than unlinked loans, higher in marginal

than developed areas, higher for poorer than richer farmers, etc.43 Although

rural traders/lenders try to avoid adverse selection risk, often farmers who

lend to other poorer farmers invite it. They offer low interest rates in

order to facilitate debt accumulation that triggers in collateral and enables

eviction from land.

Based on the experience of the Southern Cone countries, Cho and

Khatkhate also illustrate the problems of excessive increase in interest rates






43See Floro and Yotopoulos, Informal Credit Markets.

36







following liberalization which is unjustified by the fundamentals. They

point out that high interest rates are as detrimental to investment as low

interest rates are to resource mobilization.

Another major problem in the course of liberalization is that

budget deficits and the losses of parastatals crowd out private (especially

rural) demand for credit as shown by the examples of Tanzania and Ghana.*5

Yet donor reports on financial reforms have little to say about

the extent to which demand for credit by the informal sector, particularly the

private traders and farmers, is being met. As the government removes itself

from rural finance, input and output trade, there are various ways in which

lack of credit at the microlevel can have a severe impact on agricultural

output and income and asset distribution, for example by limiting access to

modern inputs, forcing the sale of farm assets, reducing maintenance

expenditures, leading to suboptimal use of inputs or forcing shift to a

suboptimal crop-mix, and increasing land concentration through foreclosures of

small farms. Broad availability of agricultural credit on affordable terms to

small farmers has a considerable positive value for social welfare. Floro and

Yotopoulos argue and I concur that financial markets require both government

regulation and government assistance for improving their performance.



Land Policy

The discussion on credit indicates that unequal access to finance may


44See Yoon-je Cho and Deena R. Khatkhate, Lessons of Financial
Liberalization in Asia: A Comparative Study (Washington, DC: World Bank, 1989).

"SSee Uma Lele, "Can Technology Transfer and Macroeconomic Adjustment
Sustain Africa's Agricultural Revolution Without an Agricultural Sector
Strategy?"; and "The Sasakawa-Global 2000 Project in Ghana: An Evaluation,"
March 1991.







inadvertently skew land distribution. On the other hand, redistribution of

land rights has been at the forefront of adjustment in many countries--most

notably in China, but also in Poland and the former Soviet Union. Evidence

universally suggests that the short term impact of land redistribution on

production can well be adverse, with considerable balance of payments

implications, although in the medium and long term assured land rights ensure

incentives to invest in land. Information on the best practices during the

transition from public to private ownership of land, however, is limited.

Such information needs to be collected to be of assistance to countries in

transition.



SUMMARY AND CONCLUSIONS

Agriculture is important in a macroeconomic context. The transition of an

economy from a predominantly agricultural to a manufacturing economy depends

on the supply response of agriculture. That response depends on price as well

as nonprice factors including especially public policy and investments in

physical and human capital and improvements in regulatory and organizational

capacity and an important regulatory and facilitating role for the government.

Nonprice factors are more important than price factors for countries at an

early stage of development and more important for a long run supply response.

With the growing concern about macroeconomic disequilibria since

the early 1980s, attention to the complex problems of developing agriculture

has diminished and public investments in agriculture have declined.

Analytical work has shifted to middle-income countries, industry, and finance

and focuses more on price than nonprice factors. This is a serious problem in

understanding the reform process, including in particular the best practices







in agriculture of the more successful countries which have resulted in rapid

overall growth. Agriculture clearly played a major role in East Asia relative

to South Asia which in turn performed better than Africa. Latin America and

Asia performed better than Africa in per capital terms although problems of

distribution remain acute in Latin America.

Future rates of growth may be adversely affected by the decline in

the rates of agricultural investments that appear to be part of a general

decline in the rates of investment being noted in developing countries. It is

clear that the capacity of countries to weather multiple external shocks is

greater when agriculture is developed than when it is not, and that requires a

substantial increase in investment. Experience of the 1970s has also shown

that, without an effort to increase the absorptive capacity of the

agricultural sector, the investment of additional resources may simply be

wasted. But to improve the efficiency of needed investments requires a

renewed focus on the performance of governments. The timing, speed, and the

extent of liberalization raise many specific issues which often appear not to

have been addressed prior to the introduction of reforms. There is clearly a

vast research agenda of a comparative nature to make the reform process both

more efficient and more humane.








Table 1: Direct, Indirect, and Total Nominal Protection Rates for Agriculture
(Selected Countries, Selected Years)



Degree of Tax Total Of
Over- Caused By Direct &
Country and Period Indirect Valuation Tariff Direct Indirect



GROUP I

Cote D'Ivoire (1960-82) -23.3 -29.6 -23.2 -25.7 -49.0

Ghana (1958-76) -32.6 -38.1 -32.4 -26.9 -55.J

Zambia (1966-84) -29.9 -50.6 -21.4 -16.4 -46.3

Average for Group I -28.6 -39.4 -25.7 -23.0 -51.6


GROUP II

Argentina (1960-84) -21.3 -17.7 -39.5 -17.8 -39.1

Colombia (1960-83) -25.2 -18.8 -37.8 -4.8 -30.0

Dom. Republic (1966-85) -21.3 -19.8 -20.8 -18.6 -39.9

Egypt (1964-84) -19.6 -17.4 -27.5 -24.8 -44.4

Morocco (1963-84) -17.4 -21.0 -13.4 -15.0 -32.4

Pakistan (1960-86) -33.1 -31.0 -44.9 -6.4 -39.5

Philippines (1960-86) -23.3 -19.3 -33.0 -4.1 -27.4

Sri Lanka (1960-85) -31.1 -14.8 -40.1 -9.0 -40.1

Thailand (1962-84) -15.0 -16.0 -13.9 -25.1 -40.1

Turkey (1961-83) -37.1 -30.9 -57.4 5.3 -31.8

Average for Group II -24.4 -20.7 -32.8 -12.0 -36.4









Table 1 : contd.


Country and Period'


Degree of
Over-
Indirect Valuation


Tax
Caused By
Tariff


Total Of
Direct &
Direct Indirect


GROUP III

Brazil (1969-83)

Chile (1960-83)

Malaysia (1960-83)

Average for Group III


GROUP IV

Rep. of Korea

Portugal

Average for Group IV


Average for all Groups


Source: Krueger, Schiff, and Valdez, "A
in Developing Countries," p. 61.


Synthesis of the Political Economy


-18.4

-20.4

-8.2

-15.7


-25.8

-1.3

-13.6


-22.5


-12.8

-17.6

-7.3

-12.6


-36.4

-2.3

-19.3


-22.3


-21.4

-37.4

-9.9

-22.9


-26.7

-1.0

-13.9


-27.9


10.1

-1.2

-9.4

-0.2


39.0

9.0

24.0


-7.9


-8.3

-21.6

-17.6

-15.8


13.2

7.7

10.4


-30.3








Table 2:
Agriculture, Value Added


Growth Rates -- Africa


Country 1970-90 1970-72 1973-77 1978-81 1983-90 Post
Adjustment


Botswana
Cameroon
Cote d'Ivoire
Gambia
Ghana
Kenya
Madagascar
Malawi
Mauritania
Mauritius
Niger
Nigeria
Senegal
Sierra Leone
Sudan
Tanzania
Togo
Uganda
Zaire
Zambia
Zimbabwe

Region


-0.69
.4.07
2.58
3.73
0.30
3.92
1.08
2.41
1.38
-1.05
-0.54
-0.59
0.95
4.53
1.88
2.04
3.57
0.04
1.96
1.98
1.54

1.67


25.13
3.53
4.06
9.28
4.29
13.75
0.02
13.17
10.97
10.09
-2.46
-1.23
1.64
0.62
4.11
3.37
2.44
0.66
2.12
3.44
19.76


4.37
1.99
1.33
2.07
-6.38
4.19
-0.48
6.36
-3.28
-7.48
-2.61
-0.47
8.38
3.81
10.13
0.21
-1.63
0.42
0.83
4.61
-0.08


-4.66
11.72
5.76
9.84
1.19
2.99
1.69
-4.26
7.75
-9.15
-0.07
-4.29
-2.58
1.72
-9.19
2.07
4.79
-5.09
2.65
-0.08
4.71


0.79


1.38
2.37
5.23
5.34
2.99
3.53
2.73
1.72
0.77
1.76
1.44
3.25
2.52
2.87
1.18
5.06
6.95
2.11
2.58
6.04
4.73

3.03


Source: FAO Trade Yearbook







Table 3


Agriculture, Value Added Growth Rates -- Asia

Country 1970-90 1970-72 1973-77 1978-81 1983-90 Post
Adjustment


Bangladesh 2.24 -7.66 4.48 1.19 1.44
China 4.56 0.41 1.27 3.24 4.39
India 2.43 -3.46 3.52 2.29 2.75
Indonesia 3.90 3.79 2.39 6.20 3.r
Korea 2.16 2.69 6.27 -2.72 1.33
Malaysia 4.14 4.49 4.44 3.68 4.64
Pakistan 3.83 0.15 2.01 6.67 4.56
Philipines 3.59 4.53 5.23 4.47 2.38
Sri Lanka 3.11 0.31 2.78 3.91 0.95
Thailand 4.10 1.18 4.16 1.71 4.07

Region 3.4 3.07 3.00

Source: FAO Trade Yearbook






Table 4
Agriculture, Value Added Growth Rates -- Eastern Europe & Middle East

Country 1970-90 1970-72 1973-77 1978-81 1983-90 Post
Adjustment


Algeria 5.76 2.34 11.13 7.62 8.04
Egypt 2.76 4.63 1.71 3.15 2.36
Hungary 2.77 4.49 2.36 2.27 0.99
Morocco 2.79 3.71 0.09 -5.24 9.46
Tunisia 2.72 22.91 4.06 4.28 0.59
Turkey 3.02 5.56 7.30 1.54 3.13
Yugoslavia 2.05 5.21 3.31 1.94 0.49

Region 3.12 2.22 3.58

Source: FAO Trade Yearbook






Table 5
Agricultural, Value Added Growth Rates -- Latin America


Country 1970-90 1970-72 1973-77 1978-81 1983-90 Post
Adjustment


Argentina
Bolivia
Brazil
Chile
Colombia
Costa Rica
Dominican Rep.
Ecuador
Honduras
Jamaica
Mexico
Panama
Peru
Venezuela

Region


1.49
2.55
3.93
3.34
3.45
2.33
2.46
3.07
2.42
0.08
2.49
1.89
1.49
2.96

2.43


1.75
5.89
7.02
-4.78
4.26
5.02
4.57
4.51
5.44
7.39
3.18
2.09
-3.97
-0.01


1.58
4.41
5.44
7.85
4.41
1.15
1.73
3.79
0.39
2.26
2.89
3.49
1.31
3.69


-0.84
1.28
7.62
4.52
3.29
1.45
-2.59
5.01
3.22
-4.26
3.96
-0.57
1.22
1.04

1.74


-1.72
2.73
3.67
5.79
3.53
3.33
-0.16
7.45
2.54
-0.18
-0.04
1.51
5.38
4.32

2.72


Source: FAO Trade Yearbook







Table 6


Total Agricultural Exports Growth Rates -- Africa

Country 1970-90 1970-72 1973-77 1978-81 1983-90 Post
Adjustment


Botswana 0.93 1.55 1.76 10.58 -3.86
Cameroon -0.75 -11.07 7.01 -13.14 -2.45
Cot- d'Ivoire 2.15 -6.18 19.83 -7.05 -5.32 -3.02
Gambia -9.73 -1.52 9.10 -20.44 -17.84 7.48-
Ghana -5.38 -18.33 6.12 -20.85 -1.88 -6.45
Kenya 0.17 4.32 15.89 -9.79 -5.64 -2.42
Madagascar -4.38 1.13 4.19 -14.12 -10.67 -14.63
Malawi 1.49 11.76 9.28 4.82 -2.37 -1.39
Mauritania -3.30 1.72 -0.80 1.97 -7.04 -1.02
Mauritius -0.27 15.88 0.04 -10.17 2.14 1.71
Nigt. -5.25 -6.31 1.71 9.01 -9.93 -5.65
Nigeria -8.76 -22.43 -0.78 -27.01 -11.40 -10.62
Senegal -5.26 9.45 25.62 -32.45 -2.58 -3.56
Sierra Leone -5.38 0.42 3.41 -19.96 -14.26 -26.74
Sudan -4.65 1.69 1.37 -7.64 -3.29 -3.35
Tanzania -5.86 3.06 3.32 -1.73 -7.36 -7.56
Togo -0.56 -19.38 10.75 -16.52 -0.45 -5.05
Uganda -6.26 -3.81 6.67 -18.24 -15.79 -18.61
Zaire -4.84 0.34 6.08 -14.76 -11.00 -9.53
Zambia -3.26 0.70 -17.19 -16.86 6.72 -3.52
Zimbabwe 0.05 19.36 0.89 6.61 0.20 0.15

Region -10.37 -5.91

Source: FAO Trade Yearbook








Table 7
Total Agricultural Exports Growth Rates -- Asia

Country 1970-90 1970-72 1978-81 1983-90 Post
Adjustment


India
Indonesia
Korea
Malaysia
Pakistan
Philipines
Sri Lanka
Thailand

Region


. -0.27
2.77
4.41
2.41
2.42
-3.42
-2.49
4.51


0.91
-7.26
17.96
-9.79
10.92
-1.69
-9.13
10.79


6.66
-5.49
-0.39
-0.31
30.00
2.09
-8.73
10.72


-2.83
-1.43
6.81
',.02
1.21
-8.61
-7.03
2.07


4.32 -1.73


Source: FAO


Trade Yearbook


-10.35
6. 1

-1.57
-8.61

2.07






Table 8


Total Agricultural Exports Growth Rates -- Eastern Europe & Middle East

Country 1970-90 1970-72 1978-81 1983-90 Post
Adjustment


Algeria -15.21 -26.08 -11.52 -7.51
Egypt -6.97 -6.73 -3.07 -11.93
Hungary -0.88 10.85 -1.09 -3.97 2.53
Morocco -3.44 6.82 -5.13 3.09 2.77
Poland -2.40 14.18 -20.06 5.80
Romania -6.61 21.66 -5.36 -17.99
Tunisia -3.25 46.51 -4.64 4.03 4.91
Turkey 2.26 12.38 8.67 -1.81 -2.12
Yugoslavia -0.17 1.43 11.69 -5.79 -5.07

Region -4.79 -4.00

Source: FAO Trade Yearbook







Table 9
Total Agricultural Exports Growth


Rates -- Latin America


Country 1970-90 1970-72 1973-77 1978-81 1983-90 Post
Adjustment


Argentina
Bolivia
Brazil
Chile
Colombia
Costa Rica
Dominican Rep.
Ecuador
Honduras
Jamaica
Mexico
Panama
Peru
Venezuela


0.14
-1.51
0.45


0.84
-4.58

2.61
-2.94
-0.40
-2.37
-5.11
0.05


-6.49
41.23
10.59


2.24
11.24

0.27
0.94
4.01
-1.99
-3.44
6.36


0.90
5.15
4.88


11.66
1.97

13.88
-1.84
n.34
-2.09
-1.18
5.02


Region


3.36
-17.56
6.65


-6.79
9.35

-0.69
-11.16
-8.18
4.24
-19.65
-14.52

-5.04


-6.04
21.62
-6.41


-0.56
-10.98

-1.95
-0.62
3.60
-5.69
-2.58
6.45


14.58
10.23
-7.45
8.99
-11.93
-2.23

-2.64

1.32
-0.23
-5.36


0.33


Source: FAO Trade Yearbook







TABLE 10


Number of Publications on Adjustment
1984 to 1992


Africa


Non-Africa


Agriculture

Poverty

Macro


112


Total: 198









Table ii: Developing Countries: Public Sector Investment as % of GDP


COUNTRIES UNDERTAKING
FISCAL ADJUSTMENT

1985-87 1988-90


COUNTRIES NOT UNDERTAKE]
FISCAL ADJUSTMENT

1985-87 1988-90


ALL COUNTRIES

BY REGION

AFRICA

ASIA

MIDDLE EAST

WESTERN HEMISPHERE


Source: World.Economic Outlook, International Monetary Fund, May 1992.


7.9


8.7


8.6



8.8

9.0

9.6

7.8


8.2


8.1

8.6

7.7

7.3


7.9

9.8

8.5

8.1


7.3

9.6

7.4

7.8




Figure 1


SHARE OF AGRICULTURE EXPORTS IN TOTAL MERCHANDISE EXPORTS
-0












W& AM *-m


20 I-


lO 1wv7 17r4 1- 175 17 1 1132 19*+ 13 M 18
171 973 1975 1977 199 1961 1963 IS5 1367 ISm

.. AFRICA AASIA

..LATIN AMERICA E. EUROPE & N. AFRICA
aOumCaS* PAO. OMoLD ohNC wTA


I | I I


I J J J J i






Figure 2

World Bank Commitments to Africa
rf 1I9l -o0


7t 76 77 78 79 80 8t 82 3 84. BS 86 87 88 89 90

* Agriculture 9r. AA4 Lnding & Tcdd


Source: World Bank data.






Figure 3

World Bank Commitments to Asia
pr 1f7-90


75. 76 77 7a 79 80 8a1 8=2 at s 85 8 7 a8 a 90

1 Aricuure o t. A4. Lndring A Tctd


Source: World Bank data






Figure 4

World Bank Commitments to EMENA
ar t7m-90


2-











75 76 77 78 79 80 St 82 83 84 85 86 87 a8 at 90

SAgriculture 9bS. Ad* ln din Tdd


Source: World Bank data.

Note: EMENA refers to Europe, Middle East, and North Africa.





Figure 5

World Bank Commitments to Latin America
P 1975-90
6-







4,


75 76 77 78 79 80 81 82 83 84 B5 86 87 88 89 90

4 Arictupww 0 st. A4 Lwcdnrq A Tdd


Source: World Bank data.










21
20
It
17
f16
lb


7T 76 77 78 79 80 81 82 83 84 r as 6 87 88 a9 90


4- Agricuft


0 Sir. A4 Lfuinq


Source: World Bank data.


Figure 6

World Bank Commitments To All Regions












r 1 s I 95-


A Tdd




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