The Role of Agriculture in Economic Development: Visible and Invisible Surplus Transfers

The Journal of Development Studies, 2007

Posted: 9 Jan 2019

See all articles by Paul Winters

Paul Winters

International Fund for Agricultural Development (IFAD)

Alain de Janvry

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy

Elisabeth Sadoulet

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy

Kostas Stamoulis

United Nations - Food and Agriculture Organization (FAO)

Date Written: Jan 1, 1998

Abstract

The financial surplus of agriculture has been central to theories of the role of agriculture in economic development. Morrisson and Thorbecke (MT) have used a constantā€price social accounting matrix (SAM) framework to measure rigorously the financial surplus of agriculture and decompose the mechanisms of surplus extraction. History and theory have, however, stressed the role of prices as an invisible transfer mechanism in addition to the visible transfers identified in the SAM framework. We extend the MT approach by defining and measuring the real surplus of agriculture and decomposing the mechanisms of surplus extraction between visible and invisible financial transfers. Using an archetype computable general equilibrium model for poor African nations, we trace the generation, transfer, and use of an agricultural surplus created by a productivity gain in agriculture. This shows that prices indeed play an overwhelmingly important role in transferring a surplus from agriculture to the benefit of the rest of the economy.

Suggested Citation

Winters, Paul and de Janvry, Alain and Sadoulet, Elisabeth and Stamoulis, Kostas, The Role of Agriculture in Economic Development: Visible and Invisible Surplus Transfers (Jan 1, 1998). The Journal of Development Studies, 2007, Available at SSRN: https://ssrn.com/abstract=3306703

Paul Winters (Contact Author)

International Fund for Agricultural Development (IFAD) ( email )

Via Paolo di Dono
Rome, 00142
Italy

Alain De Janvry

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

Elisabeth Sadoulet

University of California, Berkeley - The Richard & Rhoda Goldman School of Public Policy ( email )

2607 Hearst Avenue
Berkeley, CA 94720-7320
United States

Kostas Stamoulis

United Nations - Food and Agriculture Organization (FAO) ( email )

Viale delle Terme di Caracalla
Rome, Lazio 00100
ITALY

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
155
PlumX Metrics