Journal Press India®

The Impact of Agricultural Subsidies on Industrial Sector Development in Developing Countries

Vol 11 , Issue 2 , July - December 2024 | Pages: 65-88 | Research Paper  

 
Article has been added to the cart.View Cart (0)
https://doi.org/10.17492/jpi.focus.v11i2.1122405


Author Details ( * ) denotes Corresponding author

1. * Vikas Kumar, Senior Research Fellow (PhD), Department of Commerce, Himachal Pradesh University, Summer Hill, Shimla, Himachal Pradesh, India (kumarvikas.hp94@gmail.com)

This study explores the impact of agricultural subsidies on industrial sector development in developing countries. While subsidies support farmers, enhance food security, and stabilise markets, their effects on industrial growth are less understood. This paper examines subsidies’ direct and indirect effects on industrial development through a comparative analysis of India, Brazil, and Kenya. By investigating indicators such as GDP contribution, employment rates, and export performance, the study uses secondary data from government reports, international databases, and case studies to provide empirical evidence. The findings reveal that subsidies can promote and hinder industrial growth; they enhance rural incomes and demand for industrial goods but may also distort resource allocation and reduce competitiveness. The study concludes that balanced agricultural support is essential for sustainable development. Policy recommendations include aligning subsidies with broader economic goals, promoting agricultural innovation, and ensuring subsidies do not undermine industrial competitiveness. This research offers valuable insights for policymakers aiming to harmonise agricultural and industrial development.

Keywords

Agricultural subsidies, Industrial development, Developing countries, Economic growth, Policy analysis

  1. Arias, D., Vieira, P. A., Contini, E., Farinelli, B., & Morris, M. (2017). Agriculture productivity growth in Brazil: Recent trends and future prospects. Washington, DC: World Bank. Retrieved from https://doi.org/10.1596/29437
  2. Ariga, J., & Jayne, T. S. (1990). Fertilizer in Kenya: Factors driving the increase in usage by smallholder farmers. Retrieved from https://documents1.worldbank.org/curated/en/3042214 68001788072/930107812_2014082520300800/additional/634310PUB0Yes0061512B09780821387450.pdf
  3. Beck, T., Demirgüç‐kunt, A., Maksimovic, V., Beck, T., Demirgüç‐kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth: Does firm size matter? Journal of Finance, 60(1), 137–177. Retrieved from https://doi.org/10.1111/J.1540-6261.2005.00727.X
  4. Creswell, J. W., Clark, V. L. P., & Plano Clark, V. L. (2007). Designing and conducting mixed methods. Retrieved from https://books.google.co.in/books/about/Designing_and_Conducting _Mixed_Methods_R.html?id=YcdlPWPJRBcC&redir_esc=y
  5. Diao, X., Hazell, P., & Thurlow, J. (2010). The role of agriculture in African development. World Development, 38(10), 1375–1383. Retrieved from https://doi.org/10.1016/J.WORLD DEV.2009.06.011
  6. Dinh, H., Palmade, V., Chandra, V., Cossar, F., Dinh, H., Palmade, V., Chandra, V., & Cossar, F. (2012). Light manufacturing in Africa: Targeted policies to enhance private investment and create jobs. Retrieved from https://econpapers.repec.org/RePEc:wbk:wbpubs:2245
  7. Dorward, A., & Chirwa, E. (2011). The Malawi agricultural input subsidy programme: 2005/06 to 2008/09. International Journal of Agricultural Sustainability, 9(1), 232–247. Retrieved from https://doi.org/10.3763/IJAS.2010.0567
  8. FAO. (2017). The future of food and agriculture: Trends and challenges. Food and Agriculture Organization of the United Nations. Retrieved from https://www.fao.org/policy-support/tools-and-publications/resources-details/en/c/472484/
  9. Gulati, A., & Bathla, S. (2002). Institutional credit to Indian agriculture: Defaults and policy options. Mumbai: National Bank for Agriculture and Rural Development (NABARD).
  10. Headey, D. D. (2016). The evolution of global farming land: Facts and interpretations. Agricultural Economics (United Kingdom), 47, 185–196. Retrieved from https://doi.org/10.11 11/AGEC.12313
  11. Jayne, T. S., & Rashid, S. (2013). Input subsidy programs in sub-Saharan Africa: A synthesis of recent evidence. Agricultural Economics, 44(6), 547–562. Retrieved from https://doi.org/ 10.1111/AGEC.12073
  12. Kimenyi, M. (2002). Agriculture, economic growth, and poverty reduction. Retrieved from https://repository.kippra.or.ke/handle/123456789/2573
  13. Mahe, L.-P. (2010). Distortions to agricultural incentives: A global perspective, 1955-2007. European Review of Agricultural Economics, 37(4), 574–579. Retrieved from https://doi.org/10.1093/ERAE/JBQ041
  14. McCaig, B., & Pavcnik, N. (2013). Moving out of agriculture: Structural change in Vietnam. NBER Working Papers. Retrieved from https://ideas.repec.org/p/nbr/nberwo/19616.html
  15. Mundlak, Y., Butzer, R., & Larson, D. F. (2012). Heterogeneous technology and panel data: The case of the agricultural production function. Journal of Development Economics, 99(1), 139–149. Retrieved from https://doi.org/10.1016/j.jdeveco.2011.11.003
  16. Nepstad, D., McGrath, D., Stickler, C., Alencar, A., Azevedo, A., Swette, B., Bezerra, T., DiGiano, M., Shimada, J., Da Motta, R. S., Armijo, E., Castello, L., Brando, P., Hansen, M. C., McGrath-Horn, M., Carvalho, O., & Hess, L. (2014). Slowing Amazon deforestation through public policy and interventions in beef and soy supply chains. Science, 344(6188), 1118–1123.
  17. OECD. (2020). Agricultural policy monitoring and evaluation 2020 (Agricultural Policy Monitoring and Evaluation). OECD. Retrieved from https://doi.org/10.1787/928181A8-EN
  18. Pingali, P. L. (2012). Green revolution: Impacts, limits, and the path ahead. Proceedings of the National Academy of Sciences, 109(31), 12302–12308. Retrieved from https://doi.org/10.10 73/PNAS.0912953109
  19. Rada, N. E., & Buccola, S. T. (2011). Brazilian agricultural productivity and policy. Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania. Retrieved from https://doi.org/10.22 004/AG.ECON.103326
  20. Rand, C. N. J. P. J., & Tarp, A. S. M. S. F. (2016). Made in Africa: Learning to compete in industry. Washington, D.C, USA: The Brookings Institution.
  21. Robinson, J., & Acemoglu, D. (2012). Why nations fail: The origins of power, prosperity, and poverty. New York City, United States: Random House.
  22. Rodrik, D. (2016). Premature deindustrialization. Journal of Economic Growth, 21(1), 1–33. Retrieved from https://doi.org/10.1007/S10887-015-9122-3/TABLES/10
  23. Rodrik, D., McMillan, M., & Sepúlveda, C. (2016). Structural change, fundamentals, and growth: A framework and case studies. Retrieved from https://drodrik.scholar.harvard. edu/files/dani-rodrik/files/structural_change_fundamentals_and_growth.pdf
  24. Schwab, K. (2017). The fourth industrial revolution. Retrieved from https://www.weforum.org /about/the-fourth-industrial-revolution-by-klaus-schwab/
  25. Singh, R. (2004). Equity in fertiliser subsidy distribution. Economic and Political Weekly, 39(3), 295–300. Retrieved from https://www.jstor.org/stable/4414529
  26. Souza, P., Herschmann, S., & Assunção, J. (2020). Rural credit policy in Brazil: Agriculture, environmental protection, and economic development. Retrieved from https://www.climate policyinitiative.org/wp-content/uploads/2020/12/REL-Rural-Credit-Policy-in-Brazil.pdf
  27. Stake, R. (1995). The art of case study. Thousand Oaks, United States: SAGE Publishing. Retrieved from https://experts.illinois.edu/en/publications/the-art-of-case-study-research
  28. Stiglitz, J. E., & Yusuf, S. (2001). Rethinking the East Asian miracle. Retrieved from https://ideas.repec.org/b/wbk/wbpubs/13969.html
  29. Timmer, C. P. (2009). A world without agriculture: The structural transformation in historical perspective. Retrieved from http://www.aei.org/wp-content/uploads/2014/06/-a-world-with out-agriculture-the-structural-transformation-in-historical-perspective_145442400043.pdf
  30. Tongeren, F. van, Beghin, J., & Marette, S. (2019). A cost-benefit Framework for the assessment of non-tariff measures in agro-food trade. Retrieved from https://www.oecd-ilibrary.org/agriculture-and-food/a-cost-benefit-framework-for-the-assessment-of-non-tariff-measures-in-agro-food-trade_220613725148
  31. Tyers, R., Anderson, K., Tyers, R., & Anderson, K. (1992). Disarray in world food markets. Retrieved from https://econpapers.repec.org/RePEc:cup:cbooks:9780521351058
  32. UNCTAD. (2019). Economic development in Africa report 2019. Retrieved from https://unctad.org/system/files/official-document/edar2019_en_ch5.pdf
  33. UNIDO. (2020). Industrial development report 2020, Industrializing in the digital age. Retrieved from https://doi.org/10.18356/376459bb-en
  34. Wang, P., Ren, Z., & Qiao, G. (2023). How does agricultural trade liberalization have environmental impacts? Evidence from a literature review. Sustainability, 15(12), 9379. Retrieved from https://doi.org/10.3390/SU15129379
  35. World Bank. (2018). World development report 2018: Learning to realize education’s promise. Retrieved from https://doi.org/10.1596/978-1-4648-1096-1
  36. World Bank. (2020). World Development Indicators | DataBank. Retrieved from https://databank.worldbank.org/source/world-development-indicators
  37. Yin, R. K. (2017). Case study research and applications: Design and methods (6th ed.). New York, United States: SAGE Publications. Retrieved from https://books.google.co.in/books /about/Case_Study_Research_and_Applications.html?id=6DwmDwAAQBAJ&redir_esc=y
Abstract Views: 4
PDF Views: 5

By continuing to use this website, you consent to the use of cookies in accordance with our Cookie Policy.