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Transitions in SSA--Agriculture, Urbanization, And Income Growth

Transitions in SSA--Agriculture, Urbanization, And Income Growth

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Published by: Fanny Sylvia C. on Dec 17, 2007
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Transition in Sub-Saharan Africa:Agriculture, Urbanization and Income Growth
Drylands Research, Crewkerne, Somerset, UK 
Summary. — 
Econometric analysis of some 40 years of data has provided mixed results, because of the defects of the data, and because there are some relatively sudden structural economic shifts. Animportant shift is when agricultural labor ceases to grow, now happening in sub-Saharan Africa(SSA). A model of the interrelationship over time of the rural, mainly agricultural sector, and theurban, mainly manufacturing and service sector, is proposed. Each provides a market to the other.Growth in both requires investment, but of distinctly different types. Their interaction results in anS-shaped curve. Many SSA countries are in the acceleration phase, and its agriculture, particularlyin semi-arid areas, is increasingly oriented to the growing home market. Case studies show farmershave invested and adopted new technologies but the transition to an urbanized economy has beenhindered by poor policies. The current need is for appropriate investments and policies to developthe productivity of the urban sectors, so that they can continue to stimulate agriculture, andprovide jobs for those who are leaving farming.
2003 Elsevier Ltd. All rights reserved.
Key words — 
transitional economies, development theory, agriculture, industrial policy, statistics,sub-Saharan Africa
1. TRANSITIONS AND GROWTHMODELSDevelopment theory has been preoccupiedwith providing improved living standards andquality of life either to the great majority, ormore recently, to the poorest of the poor. Thisnormally requires economic growth greaterthan population growth, both to improveincomes directly, and to increase the taxablecapacity underpinning good government ser-vices.
It is clear that the high-income countries areurbanized and have large industrial and servicesectors. Agriculture provides only 2% of theirGDP, compared with 10% in middle-incomeand 41% in low-income countries (World Bank,2000b). Most low-income countries have ahigher proportion of their labor force in agri-culture than its proportion of output value.Many development economists in the 1950sand 1960s therefore urged the need to shiftlabor into higher productivity sectors, by astructural transformation leading to industri-alization of their economies. Rostow (1960)propounded a rapid take-off stage, for which anecessary condition was a rise in the productiveinvestment rate to over 10% of national in-come. It was generally believed in the 1960sthat such investment must be made by gov-ernment, due to lack of private capacity. Inconsequence, high taxes on agriculture throughmarketing boards and export duties had gen-eral approval. Helleiner (1966) wrote in relationto Nigeria:
The disposition of Marketing Board surpluses maynot have been perfect, but the rates of return fromtheir investments in research, roads, agriculturalschemes, universities, modern manufacturing plantsand so forth are unlikely to have been any lower than
World Development
Vol. 31, No. 8, pp. 1343–1366, 2003
2003 Elsevier Ltd. All rights reservedPrinted in Great Britain0305-750X/03/$ - see front matter
This paper owes much to the collaboration I haveenjoyed over many years with Michael Mortimore, anddraws upon studies comparing four semi-arid districts insub-Saharan Africa, which he led for Drylands Re-search. These were funded by the Department for In-ternational Development, UK, which, however, is notresponsible for the views expressed. My intellectualdebts to others too numerous to mention will be par-tially apparent in the bibliography. They include ananonymous reviewer who made helpful suggestions.Final revision accepted: 19 March 2003.1343
those on housing, sewing machines, land clearing, andthe other small-scale outlets for peasant funds dis-cussed above, let alone so much lower as to offsetthe difference between savings rates (p. 184).
Thefailureofpoliciesaimedatinducingrapidindustrialization discredited belief in a take-off and stages of growth.
The importance of theagricultural sector as a supplier of raw materi-als, food and labor, and as the home marketfor local industrial output, noted by Johnstonand Mellor (1961), was increasingly recognized.The low productivity of many governmentinvestments and the outright failure of somebecame better known. Structural adjustmentimplied ‘‘a shift away from inward-orientedimport-substituting development strategies tomore outward-oriented ones’’ (Alexandratos,1995), and debt-ridden countries have beenurged to increase and diversify agricultural ex-ports.
If GDP rises smoothly as a result of long-term effects of capital formation, labor forceexpansion and technological change, it can bemodeled by econometric analysis, using the 30– 40 years of statistical data which are nowavailable for a large number of countries.Kenny and Williams (2001) have shownthe limited explicatory power of econometricmodels, and their often contradictory results.They note several causes, including, impor-tantly, the assumption that the process of eco-nomic growth is the same, not only in allcountries, but in all periods of time. Theysuggest therefore, ‘‘that mathematical modelingtechniques have invaded territory to which theyare ill-suited’’ (p. 14).This paper uses a few generally agreedprinciples of economic growth to construct anonmathematical model that reflects histori-cal experience. The model conforms to thebroad thrust of available statistical data, butshows that economies are fundamentallydifferent at different points in time, particu-larly in the relationship of their agriculturaland nonagricultural sectors. Policies thereforeneed to be varied according to the stage atwhich the country finds itself, rather thanapplied universally. The development of theagricultural sector is initially extremely im-portant. At a later stage, however, increasesin the productivity of towns are required, toimprove urban incomes, to provide alterna-tive occupations to the rural poor, and tostimulate agricultural investment throughgrowing demand.Tomich, Kilby, and Johnston (1995) alsoreturned to a stages approach in their book,
Transforming Agrarian Economies
. The modeldiffers from them in emphasizing the change inmarkets rather than in labor disposition, andthe acceleration of change. They identifiedcountries with abundant rural labor with 50%or more of the labor force in agriculture, butthought that
it will be decades before they reach the
structural transformation turning point
, when the absolute sizeof the agricultural work force begins to decline. Untilthen, poverty can be alleviated only if productivityand employment in the rural economy are increased(pp. 9–10).
In fact, a number of countries even in sub-Saharan Africa (SSA) are at or near this point.Calculating from (World Bank, 2002), urbanpopulation in SSA increased at an average of 5% p.a. and rural at 2% p.a. 1968–2000, andaveraged 34% of the total in 2000. It is nowheading for 50% in some (Figure 1). Ruralpopulation growth had dropped to 0.4% p.a. orless in eight out of the 20 largest countries in1998–2000 (Figure 2), and not all rural is ag-ricultural. While policy debates have focusedon the pros and cons of exports, the swiftlygrowing internal market has become muchmore important to farmers, and is a maingenerator of change in farming systems, par-ticularly, but not only, in the semi-arid areas.The urban market is attracting not only theirproducts, but also their labor.The model is delineated and explained inSection 2. Section 3 illustrates the dubiety of much of the population and national incomedata relating to SSA, which lies behind allega-tions of low or negative growth rates in incomeper capita, and falling agricultural output percapita (World Bank, 2000a). Wiggins (1995,2000) has already discussed the conflict betweenthese statistics and the evidence of change andgrowth gathered from a limited number of vil-lage case studies. As these can be unrepresen-tative, Section 4 illustrates the rapidity of change in four semi-arid African districts,1960–2000. Some 30% of the SSA populationlive in semi-arid areas (Jahnke, 1982), whichprovides a difficult environment for agriculture.If there are achievements in these areas it islikely that this is also the case in the better-endowed areas. Section 5 considers the policiesand government services likely to be most im-portant in the near future.
The model utilizes some of the most basicand durable concepts in economics: ––The division of labor by specializationimproves productivity and leads to techno-logical improvements developed out of theskills and experience of the specialists.Adam Smith gave his famous illustrationof pin manufacture. Specialization requires
     N     i    g    e    r     i    a     E     t     h     i    o    p     i    a     C    o    n    g    o ,     D    e    m .     R    e    p .     T    a    n    z    a    n     i    a     S    o    u     t     h     A     f    r     i    c    a     K    e    n    y    a     U    g    a    n     d    a     S    u     d    a    n     G     h    a    n    a     M    a     d    a    g    a    s    c    a    r     M    o    z    a    m     b     i    q    u    e     B    u    r     k     i    n    a     F    a    s    o     N     i    g    e    r     C    o     t    e     d     '     I    v    o     i    r    e     A    n    g    o     l    a     Z     i    m     b    a     b    w    e     M    a     l    a    w     i     C    a    m    e    r    o    o    n     M    a     l     i     S    e    n    e    g    a     l
Annual growth %, 1998-2000
Figure 1.
Annual percentage growth in rural population, 1998–2000, in sub-Saharan African countries currently having a population over 10 million, in 1968 and 1998. Source: Calculated from World Bank (2002). Countries in this and subsequent figures are arranged in order of population size.
     N     i    g    e    r     i    a     E     t     h     i    o    p     i    a     C    o    n    g    o ,     D    e    m .     R    e    p .     S    o    u     t     h     A     f    r     i    c    a     T    a    n    z    a    n     i    a     K    e    n    y    a     S    u     d    a    n     U    g    a    n     d    a     G     h    a    n    a     M    o    z    a    m     b     i    q    u    e     M    a     d    a    g    a    s    c    a    r     C    o     t    e     d     '     I    v    o     i    r    e     C    a    m    e    r    o    o    n     A    n    g    o     l    a     Z     i    m     b    a     b    w    e     B    u    r     k     i    n    a     F    a    s    o     M    a     l     i     M    a     l    a    w     i     N     i    g    e    r     S    e    n    e    g    a     l
1968 1998
Figure 2.
Urban population, largest SSA countries, as a percentage of total population. Source: Calculated from theWorld Bank (2002).

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