Correct Sectoral Imbalance Problems occur when growth is uneven between agriculture (primary), industry (secondary), & services (tertiary) If any are neglected, others can be pulled down High dependency on one export can leave a country vulnerable (eg. tourism)
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Correct Sectoral Imbalance Problems occur when growth is uneven between agriculture (primary), industry (secondary), & services (tertiary) If any are.
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Correct Sectoral Imbalance
Problems occur when growth is uneven between agriculture (primary), industry (secondary), & services (tertiary)
If any are neglected, others can be pulled down
High dependency on one export can leave a country vulnerable (eg. tourism)
The Problems of Agriculture Low price elasticity of demand & supply –
(products supplied tend to be a small percentage of total production cost)
Low income elasticity of demand – as world income rises, agriculture is barely effected (primary products traded in perfect comp. but manufactured goods in monopolistic comp.)
Low productivity – low levels of mechanisation & degradation of land quality may even ↓ productivity
The Problems of Agriculture Cont’ Primary products are vulnerable to
Uneven tariffs/subsidies – tariffs tend to be 5x higher than on manufactured goods (subsidies cost developed countries £350B; aid to developing countries:£60B)
Declining terms of trade – export prices falling but import prices (highly skilled manufactured products) rising – keeps farmers in poverty trap & indebtedness
Policies to Develop AgricultureMust address market failure & capital
problems
Property rights extension
Disease control
Technological change
Help in provision of financial infrastructure
Abolition of marketing boards that fix prices below world prices
Raising human capital –education of women
Land improvement schemes
Industrialisation: Moving Away from Agriculture
Developing countries have adv. of lower wage costs
Move into more flexible markets of manufacturing (esp. clothing)
BUT:
Migration to cities may leave agriculture under-resourced
Value added is mostly at packaging & distribution stages – small margins at production stage
Tourism: A Service Based Strategy Attractive due to high YED; benefit from
rising world incomes
Tourist spending has multiplier effects – income passed on & creates tax revenue
Can attract foreign investment (hotels, etc)
Local infrastructure catering to tourists assists local businesses (roads, trains, etc)
Encourages the tertiary sector – may correct sectoral imbalance