Agricultural Development; Farmers, Farm Production and Farm Markets; Vol 3 in Handbook of Agricultural Economics

Economic growth theory can be divided into early growth theory and newer models of “endogenous” growth. The chief insight from the early growth theory [Solow (1956)] was that an efficient economy leads to a steady state solution where product per worker does not grow without invention and innovation. When exogenous technological change is introduced in these models, product per worker does grow. Invention and innovation are required for economic growth. Jones (2002) reports a “Malthusian” extension of early growth theory. Under the assumption that cultivable land is in fixed supply, Jones shows that the steady state solution is Growth in product/worker = Growth in technology − βn, where β is the coefficient on land in the agricultural production function, and n is the rate of population growth. This casts growth as a race between technology and population growth. The designers of the International Agricultural Research Center (IARC) 2253 2254 R.E. Evenson and P. Pingali system recognized that technological gains could offset the negative consequences of population growth. The designers of the IARC system also evaluated the National Agricultural Research Systems (NARS) in place in the 1950s and concluded that they were not up to the task of meeting the challenge of high population growth rates. Demographic transition models showed that the decline in death rates, particularly child mortality rates, associated with improved public health and immunization programs were producing high population growth rates in the 1950s and 1960s. By 2000 many countries, particularly in Sub-Saharan Africa, had tripled their populations since 1950. By 2000, however, most countries, even in Sub-Saharan Africa, were well along in their demographic transitions. The more recent endogenous growth models treat R&D as a variable endogenously determined by incentive structures, particularly regarding intellectual property rights. Endogenous growth models treat population growth as a positive inducement to inventions and innovation. The reasoning is that invention and innovation is proportional to population size and that invention and innovation produce externalities that benefit all members of the population. Data on patents granted certainly do not bear this out. The number of patents granted to inventors in Sub-Saharan Africa and even in South Asia is negligible. Inventions are not proportional to population. This is because R&D is not proportional to population. Jones (2002) develops a model where invention and innovation is undertaken in high-income countries and where developing countries devote effort to “mastering the World Technology frontier”. But as will be noted in the section on the Green Revolution, many developing countries invest nothing in industrial R&D. Almost all countries invest in public sector agricultural research in agricultural experiment stations. But as noted below, several have failed to produce a Green Revolution.