Agricultural development and structural change

The paper advocates public support for the development of agriculture as a way to facilitate structural change in developing countries. In the first chapter we describe the global transformation in agriculture that has taken place over last few decades. Despite fast population growth, the growth of productivity in agriculture has enabled the development of the industry and service sectors, which in turn have resulted in the reduction of poverty and raising of the standard of living. Structural change has not yet been completed, however, especially in the developing world. In the second chapter we investigate the drivers of and barriers to this process and discuss two policy approaches to facilitate structural change – state-driven industrialisation and support for agriculture development. Following that we outline the policy instruments to overcome the barriers in question. We have focussed on improving the effectiveness of the agriculture market (both for final goods and factors of production) as well as improving the quality of necessary public goods.