Economics Essay

Written by AcademicWritingTips.org

Wednesday, 08 September 2010 06:31 –

Economics Essay

1. 1. Explain the view that the dependence of developing economies on agriculture condemns them to remaining among the world’s poorest nations.

Introduction:

Agriculture plays a major role in developing countries, agriculture provides food to the population, products are used as raw materials for agro based industries, provide employment and the surplus is exported to other countries. However the over reliance on agriculture has rendered these countries to be ranked as the poorest globally, this is because the agricultural sector is faced with low productivity levels, high cost of inputs, poor land tenure system and the failure to make a break through in research and development in the agricultural sector.

The high fluctuations in global prices of agricultural products has led to the current state of these countries, most developing countries produce similar goods for export and this leads to an oversupply leading to low prices. The countries become price takers other than price makers in the global market due to the high supply levels.

Cash crops vs.   Subsidence crops

1 / 7

Economics Essay

Written by AcademicWritingTips.org

Wednesday, 08 September 2010 06:31 –

Cash crops in developing countries are mainly for exports and some of these products include coffee, tea and cocoa, however the oversupply of these products in the global market leads to low prices, high competition in the global market also leads to the low prices of these products.

Subsistent crops are produced for the purpose of domestic consumption and the surplus is sold in the local markets, however the products are usually perishables and due to lack of good infrastructure and communication networks products do not reach the market where prices would have been high.

The production of both cash crops and subsistence crops is important in these developing countries, cash crops are grown for the purpose of export while the subsistence crops are for local production, however these countries mostly produce the cash crops in large quantities in order to export although these goods do not yield sustainable incomes for the country to develop, there is need to diversify these products.

The need to import food

Many developing countries are faced with natural disasters such as draughts and floods, this cause them to import food from other countries when such disasters occur, they lack food security programs that ensure that in years of over production the surplus is stored and these therefore contribute to food shortages, these importation of food products from other countries results to unfavourable balance of payment and unsustainable debts, therefore there is need to initiate a food security program and also an import substitution strategy.

2 / 7

Economics Essay

Written by AcademicWritingTips.org

Wednesday, 08 September 2010 06:31 –

Falling food prices in the long term

Due to the overproduction of agricultural products leading to high supply levels, the prices of food products falls even to levels below the cost of production, these leads to underdevelopment in the agricultural sector where farmers avoid overproduction of products.

Price stabilisation

The developing countries government fail to initiate price stabilising mechanism which would aid in stabilising prices, most agricultural products are faced with fluctuating prices due to competition from other countries that produce similar products.

Land reform

3 / 7

Economics Essay

Written by AcademicWritingTips.org

Wednesday, 08 September 2010 06:31 –

In developing countries land policies are not well formulated especially in ownership of land, these leads to the lack of resources such as land for agriculture to the needy population, example most of the people who own large chunks of land are the rich who do not utilise the land for agriculture, while the needy population that depend on agriculture do not have access to land to expand their production, therefore there is need for land reforms that will lead to proper utilisation of land.

First world agricultural policies

Most agricultural products from developing countries are exported to developed countries, however most developed countries impose quotas, tariffs and bans on imports from developing countries, these is a major problem to developing countries because this restrict the level of exports to such countries.

Therefore there is need for trade liberalisation among countries where such tariffs and quotas are removed and this will aid in improving the current state of the developing countries, other developed countries subsidise their agricultural products in order to encourage farmers to produce more, this is in contrast with developing countries where such subsidies and policies are not imposed on agricultural products leading to underproduction.

Suitable technologies

4 / 7

Economics Essay

Written by AcademicWritingTips.org

Wednesday, 08 September 2010 06:31 –

Developed countries lack suitable technology to increase the production levels of their products and these is due to very little efforts in research and development of the agricultural sector, they also lack capital to buy machinery that aid in increasing productivity and in reducing the cost of production. The importation of technology and machinery that increase the level of productivity level of agricultural requires capital while the developing countries lack capital and funds to purchase this machinery.

The developed countries involve in agriculture which is highly developed and mechanised, these leads to low production costs and high production levels, they have developed agricultural research and development centres that are aimed at increased levels of production, these is in contrast with developing countries where very little mechanisation has been applied.

In conclusion there is need for structural and institutional changes that need to be undertaken by the developing countries, they have to modernise and mechanise the agricultural sector, formulate policies that will aid in developing of the agricultural sector to increase the level of exports of these products, subsidise the agricultural sector, subsidise agricultural inputs and finally diversify the products produced for exports.

1. 2. Discuss the extent to which diversification into mass international tourism can solve the problems of the developing world.

Tourism provides a way in which the developing countries can develop without having to undergo major structural and institutional changes, increase in the level of tourism in a country will increase the level of flow of funds which are brought into a country by tourist, tourist spend a lot of money in developing countries when they visit natural sceneries and the wildlife, this is a

5 / 7

Economics Essay

Written by AcademicWritingTips.org

Wednesday, 08 September 2010 06:31 –

positive direction to the development of the less developed countries that are endowed with these tourist attraction sites.

However countries that experience civil and regional wars and also political instability are less likely to attract tourist due to insecurity reasons, therefore there is need to have peace in country to provide a safe environment to the tourist, terrorism also plays a negative role in discouraging tourism where terrorism prone countries do not attract tourism.

Tourist purchase local products and these aids in improving the local industry to produce more leading to more productivity, improved quality and improved gross national production, they promote the local industries such as cultural based industries and as a result improve the current situation of developing countries.

Tourism helps in the creation of employment opportunities, in a case where the level of tourism increases there is need to increase the number of employees in tourist interest areas, there will be an increase in the number of people employed as tour guides, more drivers will be needed in tour companies, more employees needed in the tourist luxury hotels and finally more opportunities to expand the local industry products.

The increase in the level of tourist in country will also aid in improving the countries current balance of payment, tourism can be seen as an export and therefore the more we increase the level of tourist the more the exports and therefore the developing countries will improve in terms of balance of payment.

The initial capital needed to establish tourist sites is minimal, the tourist sites provide high returns to capital compared to the returns other sites provide, and the running cost for these

6 / 7

Economics Essay

Written by AcademicWritingTips.org

Wednesday, 08 September 2010 06:31 –

sites is not high compared to other types of investments. Therefore there is need to increase the level of tourism in order to increase the possibility of realising the high returns from tourism in developing countries.

An increase in tourism will lead to a growth in the countries infrastructure, countries will improve and develop infrastructure and communication network in a country in order to attract and maintain tourist, this improvement will help local industries and businesses to develop by providing an enabling environment. Good infrastructure is a necessity in economic growth and this improvement will lead to economic growth and development.

REFERENCE:

Ian Livingstone (1970) Economics and Development: an introduction, Oxford University Press, Oxford