Abstract
An understanding of the future of smallholder agriculture is critical to the design of development policies. One of
the major questions regarding smallholders is the potential impact of globalisation. Addressing this question requires
an analysis of past agricultural development, such as the Green Revolutions in Asia; a recognition that the developing
world is globalising at an uneven pace – on some measures perhaps countries containing at least 2 billion people
are not globalising at all; and a clear understanding of the technological and institutional prerequisites for
participation in a globalised economy. Much current policy advice focuses on the effects of policy distortions, but
inadequate attention is given to the serious, embedded, institutional deficiencies that limit many smallholder areas
from taking advantage of market opportunities. These institutional deficiencies require intensive, and long-term,
attention if globalisation is to offer opportunities for smallholder development.
Research findings
- There is a current division between globalising and non-globalising developing countries, due in part to the past
success of Green Revolutions in some areas and slower progress in others.
- In order for non-globalising areas to catch up, it will take more than simple technological advance because these
areas face the problems of late entry and must confront increasingly sophisticated and demanding markets.
- Neoclassical economics predicts that liberalised markets will allow smallholders to advance, but the theory overlooks
serious institutional deficiencies, including inadequate access to information, contractual enforcement and
finance, that constrain smallholders from full participation.
Policy implications
- Development policy must devote more attention to reducing transaction costs in poor rural areas and to promoting
local organisations that help lower these costs.
- Continuing investment in public sector agricultural research is required because the private sector is unlikely to
address many of the needs of smallholders.
- Technological and institutional development are co-evolutionary, and public sector research must be reorganised
to reflect this.
- Subsidies may be required to elicit private sector engagement in research and development for smallholders, and
such support must be directed towards the entire gamut of market failures affecting smallholder agriculture.
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