Effects of Agriculture on Economic Growth
The Ethiopian rural development strategy & policy fundamentally depends on smaller scale farmer led industrialization (ADLI) as a motor for economic development . ADLI builds on theories from 1960s in which smallholder farming developed 1st to facilitate demand for industrial commodities & inputs for industrialization . ADLI aims agricultural production enhancement for overall production growth, as well as invest in those industries with most production linkages to rural areas.
This strategy assumes that inter-sectorial connections will reinforce development impetus derived from increasing productivity by both sectors by which agricultural sector obtain machinery, chemicals & consumers commodities from industry for exchange to food and raw material. ADLI aims to improve productivity of agriculture by enhancing its practices through raised use of modern fertilizers, advanced seeds, training programs, & establishing infrastructure through small & medium scale irrigation, enhanced micro-financing, promoting large-scale farming . Ethiopian government considers advancement in smallholder farming as center of whole economic progress since it accounts over 80% of total output.
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Since 1992, Ethiopia has made a substantial improvement in economic & social progress by implementing right strategies & directions which are influential in enhancing the national economy. ADLI has introduced a new push towards creating bases conducive for overall developmental progress. It emphasizes a smallholding farming-led development will bring about accelerated economic growth, qualify its people to be a beneficiary of its output, & sets concrete basis for industrial development.
Given its large size, agriculture sector today & in the future, is imperative that continued efforts are made to make it more productive . It’s in large, the principal employer, contributing for most exports & largest output. Although some labor lifted out of agriculture, considerable shifts are likely to take a long time. Moreover, it has been a vital determinant of poverty alleviations since past two & half decades. Each percent of GDP growth reduces by 0.55 percent, but each percent of agricultural growth reduces poverty by 0.9 percent. So that, further labor productivity improvements are indispensable for Ethiopia’s future prospects.
Why did ADLI focus on broad-based small farmer strategy? Is there any reason behind? AS clearly indicated by the rural strategy there is a need for powerful equity and efficiency case for providing all Ethiopians with the human capabilities to participate in overall development process-which is vital to core principles of government .
This implies providing basic services for all & steadily improving service packages over time. As under current plans, such a package is likely to include basic schooling, health service, water and sanitation, rural roads, nutrition and food security-with rural electrification and telecoms a further step. The other reason is increasing productivity of small farms is necessary and feasible to make rapid inroads into poverty in medium term. It is difficult in constructing scenarios for rapid income & poverty alleviation without broad-based productivity enhancements in cereals & other crops. Because eighty percent of the total labor is a small-holder engaged in farming which dependent on cereals, which account for 89 percent of the total area under temporary crops (CSA, 2010). This data are also consistent with our finding in that agriculture is still dominant and have a high share of GDP.