Complimentarities Between Agriculture and Industry

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This essay aims to discuss the complementarities between the agricultural and industrial sectors in the process of economic development of Less Developed Countries (LDCs) like Zambia. To achieve this aim, an exposition of the role of agriculture and industry will be put forward based on some of the theoretical assumptions of Sir Arthur Lewis’ dual economy model and Albert Hirschman’s conceptualization of the inter-sectoral relationships. Relevant examples and definitions will be presented as a way of generating more understanding of the topic at hand. A summary will then be drawn from the discussion.

To begin with, economic development is a multidimensional concept that has attracted a plethora of definitions. For Goulet (2006), its core components include life-sustenance, self-esteem and freedom; for Sen (1999) it means the expansion of entitlements and capabilities, and for other scholars like Todaro and Smith (2008) it refers to guaranteed access to the basic needs of life. For Moore (1965), it entails the establishment or overhauling of fiscal, financial and fiduciary mechanisms. It generally also involves institutional changes in the precise sense of alterations in the management of production and distribution, and changes in location, definition, and motivation of economic activities.

Least Developed Countries or LDCs represent the poorest and weakest segment of the international community. They comprise more than 880 million people (about 12 per cent of world population), but account for less than 2 percent of world GDP and about 1 percent of global trade in goods (http://www.unohrlls.org/en/ldc/25/).

Their low level of socio-economic development is characterized by weak human and institutional capacities, low and unequally distributed income and scarcity of domestic financial resources. They often suffer from governance crisis, political instability and, in some cases, internal and external conflicts. Their largely agrarian economies are affected by a vicious cycle of low productivity and low investment. They rely on the export of few primary commodities as major source of export and fiscal earnings, which makes them highly vulnerable to external terms-of-trade shocks. Only a handful has been able to diversify into the manufacturing sector, though with a limited range of products in labor-intensive industries, i.e. textiles and clothing. These constraints are responsible for insufficient domestic resource mobilization, low economic management capacity, weaknesses in program design and implementation, chronic external deficits, high debt burdens and heavy dependence on external financing that have kept LDCs in a poverty trap (http://www.unohrlls.org/en/ldc/25/).

The category of LDCs was officially established in 1971 by the UN General Assembly with a view to attracting special international support for the most vulnerable and disadvantaged members of the UN family.The current list of LDCs includes 48 countries; 33 in Africa, 14 in Asia and the Pacific and 1 in Latin America (Ibidem).

Historically, agriculture has existed before the advent of industry. According to the World Bank (2008), agricultural growth was the precursor to the industrial revolutions of the mid-18th and late-19th centuries. As agriculture grew, it laid the foundation for the growth of industry with the introduction of the money economy and the factory system. The existence of the agricultural and the industrial sectors is what many scholars term dualism.

According to Thirlwall (2011), dualism describes a condition in which the economies of LDCs are divided between the agriculture or traditional sector, and a modern or industrial sector.

The Lewis model therefore is premised on the assumption of the dual economy with a modern industrial sector and a subsistence agricultural sector, and assumes that there are unlimited supplies of labour in the latter in the sense that the supply of labour in agriculture exceeds the demand for...
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