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Berkeley A,RESEC 298 - Population, Agriculture, and Development

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Figure 1. Economics of use of a CPRARE 298, Fall 2002 Alain de JanvryPopulation, Agriculture, and DevelopmentWhat is the relation between population growth and economic development via agricultural response? (whereeconomic development = income level and income growth, poverty, inequality, vulnerability, basic needs, sustainability, quality of life)What is the relation between economic development and fertility? Fertility modelsPopulation growth Economic development Agricultural development modelsTechnological changeInstitutional changeI. The Pessimists: population growth undermines development1.1. Malthus and the Neo-MalthusiansNo technological and institutional change in agriculture.Decreasing returns in agriculture (Ricardo).Population grows exponentially.Magnificent dynamics: food production limits population growth.Population growth keeps people in a poverty trap (subsistence level).Critiques: predictions do not correspond to observed facts.Steadily declining food price on world market for the last 100 years shows that the growth of agricultural production exceeded the growth in effective demand (role of technological change).Hunger can exist without global food scarcity (Sen entitlements)Hunger not due to falling land/population ratio.1.2. Neo-classical Solow growth modelThere are decreasing returns to factor deepening.Population growth does not reduce growth, but reduces per capita income growth.Technical progress is the only long term source of growth, but it is not linked to population growth. Hence, it is not a response to population growth. Technology is an international public good (exogenous).Critiques: Technological change not exogenous. Technological not an international public good.1.3. Hardin and the tragedy of the commonsOpen access resources are non-excludable in access and rival in use.Common property resources (CPR) are excludable in access to non-community members (but non-excludable to community members) and rival in use.Examples of CPR: community grazing range for cattle, community forestry, devolved irrigation systems, fishing grounds, soil fertility under itinerant farming (slash-and-burn) with individual plots on community land (Africa).Open access and CPR without rules (cooperation failures) lead to:- Over-extraction from the resource (each user imposes a negative externality on the others which is not taken into account by the individual. Hence, each individual over-extracts relative to the social optimum).- Under-provision for the maintenance of the resource (each user creates a positive externality on theothers when contributing to maintenance. Hence, each individual under-provides relative to the social optimum).-Population growth exacerbates both over-extraction and under-provision.Over-extraction and under-provision lead to exhaustion and disappearance of the resource.Figure 1. Economics of use of a CPR$ MR =0 Max  MC q = effort1 1/13/19AR = ACTRTC = ACq’Private optimum under:Open accessNon-cooperative CPRq*Optimum under:Private propertyCooperative CPRRegulation, tax, feeARPrivate optimum, cooperative optimum: Max  with respect to q.Solution: MR = MC, q = q*Open access solution, non-cooperative CPR solution: increase q until  = 0.Solution: AR = AC, q = q’Imposes a negative externality on others:  declines for all each time q increases for one.Critique: CPR can be well managed: Wade, Ostrom, Platteau, CAPRI.II. The Optimists: Agriculture can adapt to population growth through technological and institutional innovations1. Ester Boserup: technology responds to population pressurePopulation pressure on land (falling land/population ratio) induces adoption of new techniques.New techniques consist in increased frequency of cropping (length of fallow period): shift from gathering, to forest fallows (25-50 years), to bush fallows (10 years), to short fallows (2 years), and to annual crops.Observe that land productivity (yields) increases with population pressure.But this does not imply that labor productivity (per capita income) increases.Critiques:Model focuses on technology transmission, not on the generation of technology: where does it come from?Gives a very long term view: what happens in the short run?Ignores inequality problem: food needs may not be met for all with rising yields.Cross-sectional data analysis inadequate (Cuffaro paper).2. Hayami and Ruttan induced technological innovations modelNeo-classical model: markets work. Relative factor scarcities are reflected in relative factor prices.Agricultural technology not easily transferable: largely needs to be generated locally (need invest in R&D).Public sector research responds to farmers demands for new technologies that can save on the factors becoming relatively more expensive.Hayami and Ruttan’s observation on the historical course of technological innovationsJapan: rising population pressure in agriculture. U.S.: rising labor scarcity in agriculture.US: w/pA  --> labor-saving tech change --> mechanical innovations (tractors, harvesters) --> q/L .Japan: w/pA  --> land-saving tech change --> bio-chemical innovations (Green Revolution: high yielding seeds, fertilizers, pesticides, irrigation) --> q/A .Technological change substitutes selectively for the expensive factor: bias of technological change: labor saving or land saving.Logic of process: model of induced technological innovations:Exogenous changes:Change in relative resource scarcity (labor vs. land)e.g., population growthChange in relative factor prices (w/pA)e.g., wage falls relative to the price of landPublic research response to rising relative factor scarcities.Determines research priorities; endogenous bias of technological change.Technological change toward saving the factor becoming relatively more expensive.e.g., land saving if w/pA fallsBias of technological change: US: labor saving. Japan: land-savingCritique: Assumes no market failures (prices reflect social scarcity) and no government failures (political economy of public budget allocation).3. Property rights school (Demsetz, North, Platteau): property rights over land respond to population pressure (and to market integration). Induced institutional innovations model.New Institutional Economics: explain the emergence, logic, transformation, and disappearance of institutions.Institutions are rules and conventions that codify

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