I guess the fact that no country in history has gotten rich while being agrarian gives me a very strong prior against it. And there are clear reasons why; agricultural goods are commodities that are extremely cheap, so even having an advantage in them, you can only have a slim advantage.
My impression is that Argentina became a very rich country, by the standards of today, largely as an agricultural exporter? And just because a product is cheap doesn’t mean you can’t have a big advantage in them if it is a very scaled business; according to OWID, US agricultural productivity is over 100x higher than in Liberia in dollar term; I don’t have the bushels/farmer figures to hand but I suspect there are also orders of magnitude difference.
Theres no assumption that services are not valuable, just that productivity growth (as measured by revenue per worker growth) is much slower.
I’m not assuming it, I’m offering it as an explanation. The ‘nontradable’ explanation doesn’t really make sense to me, because it doesn’t explain why people would choose to work in a less productive sector (agriculture or services), where wages are presumably lower, instead of manufacturing. Unless you think that manufacturing has to be combined with labour suppression, where wages will be held lower than productivity, in order to facilitate more investment? I do get the impression that is part of the story behind east asian growth, and it does make sense it would be easier in manufacturing than services.
You could argue that Argentina, and even my home country of new Zealand have kind of “made it” through agriculture.
My issue is, even assuming you are right Larks and African countries somehow manage become far more productive at farming and become more competitive on the global stage, thats unlikely to solve the jobs problem. Increased productivity means industrialized farming, means less farming jobs not more. Especially in countries like Uganda with high population and low land area, it’s hard to see how this could solve the jobs problem, although obviously it would probably be net positive and help the economy.
New Zealand and Argentina also have huge land area to population ratios, which enables large scale farming to have a bigger impact.
As a side note the absolute nail in the coffin for any opportunity for African countries to become serious food exporters are the insane farming subsidies and tariffs both in the EU and the US, which wipe out one of the only sectors African countries have a chance to be competitive in. Noone talks about it much, but it’s not impossible these subsidies and tariffs might cause more net suffering than all the aid these countries reduce IDK.
I wasn’t aware of Argentina as an example and spent some time looking into it. My takeaway is that it’s interesting and I don’t have a great story about it, other than that at the time, agriculture was most of all trade, and most of all consumption globally, whereas today with a much richer and industrialized world, demand for food is not large enough to make it competitive with manufacturing as a path. But that’s tentative.
just because a product is cheap doesn’t mean you can’t have a big advantage in them if it is a very scaled business; according to OWID, US agricultural productivity is over 100x higher than in Liberia in dollar terms
This is largely because the US uses so much more capital and so much less labor than developing countries, so I don’t interpret this in support of the idea that developing countries can get rich without most labor leaving agriculture.
it doesn’t explain why people would choose to work in a less productive sector (agriculture or services), where wages are presumably lower, instead of manufacturing.
That’s the puzzle I was talking about in point #3. The likely explanation is that people select into the less productive sector because they don’t have the skills to work in manufacturing, for reasons elaborated more in that section.
Thanks for the response!
My impression is that Argentina became a very rich country, by the standards of today, largely as an agricultural exporter? And just because a product is cheap doesn’t mean you can’t have a big advantage in them if it is a very scaled business; according to OWID, US agricultural productivity is over 100x higher than in Liberia in dollar term; I don’t have the bushels/farmer figures to hand but I suspect there are also orders of magnitude difference.
I’m not assuming it, I’m offering it as an explanation. The ‘nontradable’ explanation doesn’t really make sense to me, because it doesn’t explain why people would choose to work in a less productive sector (agriculture or services), where wages are presumably lower, instead of manufacturing. Unless you think that manufacturing has to be combined with labour suppression, where wages will be held lower than productivity, in order to facilitate more investment? I do get the impression that is part of the story behind east asian growth, and it does make sense it would be easier in manufacturing than services.
Great discussion
You could argue that Argentina, and even my home country of new Zealand have kind of “made it” through agriculture.
My issue is, even assuming you are right Larks and African countries somehow manage become far more productive at farming and become more competitive on the global stage, thats unlikely to solve the jobs problem. Increased productivity means industrialized farming, means less farming jobs not more. Especially in countries like Uganda with high population and low land area, it’s hard to see how this could solve the jobs problem, although obviously it would probably be net positive and help the economy.
New Zealand and Argentina also have huge land area to population ratios, which enables large scale farming to have a bigger impact.
As a side note the absolute nail in the coffin for any opportunity for African countries to become serious food exporters are the insane farming subsidies and tariffs both in the EU and the US, which wipe out one of the only sectors African countries have a chance to be competitive in. Noone talks about it much, but it’s not impossible these subsidies and tariffs might cause more net suffering than all the aid these countries reduce IDK.
I wasn’t aware of Argentina as an example and spent some time looking into it. My takeaway is that it’s interesting and I don’t have a great story about it, other than that at the time, agriculture was most of all trade, and most of all consumption globally, whereas today with a much richer and industrialized world, demand for food is not large enough to make it competitive with manufacturing as a path. But that’s tentative.
This is largely because the US uses so much more capital and so much less labor than developing countries, so I don’t interpret this in support of the idea that developing countries can get rich without most labor leaving agriculture.
That’s the puzzle I was talking about in point #3. The likely explanation is that people select into the less productive sector because they don’t have the skills to work in manufacturing, for reasons elaborated more in that section.