However, agricultural productivity growth also increases the income people can earn in agriculture relative to in other sectors, so it could also incentivize people to stay in agriculture. That is the opposite of what we want!
Higher incomes is the goal so why is it a problem if that comes from staying in agriculture? Is the idea that this tops out at a lower level than manufacturing or service-focused economies? Aren’t there some developed countries, like New Zealand, where agriculture makes up more than half of their exports?
Is the idea that this tops out at a lower level than manufacturing or service-focused economies?
Yes, this is the idea—evidence mainly being that
a) no country has ever gotten rich while staying agrarian. New Zealand may export a lot of agriculture but only 6% of their population works in it.
b) across countries, agricultural wages are consistently lower than non agricultural wages.
Although I agree with all your substantive points here Karthik, I don’t think the agriculture sector as a whole is “poorer” than the rest of the country. Sure wage workers aren’t paid that much, but Kiwi farners are often mega rich sure to their insane and ever growing land/infrastructure/livestock asset base. Most new Zealand farmers would have net worth well into the millions, wages only tell part of the story.
I should have specified that I meant across developing countries. It’s possible that wages and output figures underestimate prosperity in the sector due to assets, but the vast majority of farms in developing countries are very small, so I doubt that changes the takeaway.
Higher incomes is the goal so why is it a problem if that comes from staying in agriculture? Is the idea that this tops out at a lower level than manufacturing or service-focused economies? Aren’t there some developed countries, like New Zealand, where agriculture makes up more than half of their exports?
Yes, this is the idea—evidence mainly being that
a) no country has ever gotten rich while staying agrarian. New Zealand may export a lot of agriculture but only 6% of their population works in it. b) across countries, agricultural wages are consistently lower than non agricultural wages.
Although I agree with all your substantive points here Karthik, I don’t think the agriculture sector as a whole is “poorer” than the rest of the country. Sure wage workers aren’t paid that much, but Kiwi farners are often mega rich sure to their insane and ever growing land/infrastructure/livestock asset base. Most new Zealand farmers would have net worth well into the millions, wages only tell part of the story.
I should have specified that I meant across developing countries. It’s possible that wages and output figures underestimate prosperity in the sector due to assets, but the vast majority of farms in developing countries are very small, so I doubt that changes the takeaway.
Oh yeah I thought you were including places like new Zealand too based on the previous comment.