INVESTING in Agriculturally-Led Growth: The Philippine Case

James Roumasset

MPRA Paper from University Library of Munich, Germany

Abstract: Much of the debate on the role of agriculture in economic development centers on whether agriculture should be taxed or subsidized. The classical prescription for economic development is investment in industrial modernization financed by an agricultural surplus. Proponents of agricultural development have cautioned, however, that squeezing the agricultural sector will stifle the engine of growth and lead to economic stagnation (e.g., Johnston and Mellor, 1961; Krishna, 1967). Instead, they have advocated the opposite policy of stimulating agricultural development through investment and subsidies to the agricultural sector. The 1980s witnessed a widespread recognition that either taxing or subsidizing agriculture wastes resources and reduces the incentives for investment (see e.g. World Developme~R~et port, 1983 and 1987). This leads to the conundrum that motivates the present paper: how can agricultural development be stimulated without distorting the incentives for efficient resource allocation and investment?

Keywords: agriculture; growth; the Philippines (search for similar items in EconPapers)
JEL-codes: D92 N55 (search for similar items in EconPapers)
Date: 1992
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Citations: View citations in EconPapers (2)

Published in SOUTHEAST ASIAN JOURNAL OF AGRICULTURAL ECONOMICS 1.1(1992): pp. 63-70

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