Page 2: Economic development
In LDCs where industry is relatively underdeveloped, agriculture is very important to the economy as a whole. It is described as an engine of economic development. When crops fail, the entire country is affected, but when the agricultural sector does well it:
- provides food for local communities and crops for export
- improves incomes for farmers and their workers
- stimulates local economic activity by increasing demand for goods and services
- enables people, both at a local and national level, to buy more goods and services
- creates jobs
- increases living standards.
A strong agricultural sector will therefore help poor countries to take a step away from poverty, and towards prosperity.
According to the UK's Department for International Development (DFID), 'There is a mass of evidence that increasing agricultural productivity has benefited millions through higher incomes, more plentiful and cheaper food, and by generating patternsof development that are employment-intensive and benefit both rural and urban areas. More importantly, it has provided the spur to economic development outside agriculture where growth and job creation are faster and wages higher.'
Investment in agriculture leads to economic development for the whole country. This multiplier effect generates income with each round of spending. As farmers sell their crops, they receive income.
This income may be spent locally, helping to fund resources such as education, water, health services and infrastructure. More people will be employed as a result and so the multiplier effect continues adding to the economic development of the region, and ultimately that of the country. All of this development will have started in the agricultural sector.