A Critical Assessment of Economic Policy Choices

Industrialization at the Expense of Agriculture

6. Many developing countries have sought to modernize their economies as quickly as possible by basing themselves for the most part on the often unjustified belief that rapid industrialization can bring about an improvement in general economic well-being, even if agriculture suffers in the process.

They have thus adopted policies protecting domestic industrial production and manipulating the exchange rates of the national currency to the disadvantage of agriculture, policies of taxing exports of farm produce, and policies supporting the purchasing power of urban inhabitants, based on the control of food prices or other forms of intervention that alter the market distribution mechanism and that have therefore often led to a lowering of exchange rates for agricultural, as against industrial, production.

The resulting fall in farm income has affected small producers so badly that many have been forced to give up farming. All this has given added impetus to the process of concentration of landholdings.