Productivity Gain or Immiserising Growth? Economic Paper 74:
What are the best strategic options for developing country governments to improve rural living standards through agricultural growth?
Tropical commodities such as coffee, sugar and rice are experiencing a long-term decline in prices. This presents a particular problem for producers, since these commodities have traditionally formed the core of agricultural exports of most developing countries since the 1960s.
The European Commission has argued comfortingly that declining prices are driven mainly by productivity gains, but the analysis presented here suggests otherwise. Instead the authors find evidence that the difference in productivity levels between countries is increasing, with some falling further and further behind. Diversification into higher value-adding agricultural industries will be difficult without dramatic improvements to rural infrastructure and institutional support. Since these improvements are unlikely to be achieved, the authors conclude that the major objective for agricultural producers in developing countries must remain productivity gains in existing commodity industries.
Euan Fleming is an Associate Professor in the School of Economics at the University of New England, Armidale, NSW, Australia.
D. S. Prasado Rao is a Professor in the School of Economics and the Director of the Centre for Efficiency and Productivity Analysis at the University of Queensland, Brisbane, Queensland, Australia.
Pauline Fleming is a Lecturer in the School of Economics at the University of New England, Armidale, NSW, Australia.
Contents: Executive Summary; Background to the Study; Review of commodity production and export of selected tropical commodities, 1970 to 2002; Is there evidence of immiserising growth in developing country agriculture? Research agenda; Methods of analysis; Data and variables; Results; Has productivity change counteracted declining commodity producer prices? Strategic options for African agriculture; Conclusions; References; Appendices
Published by Commonwealth Secretariat Edited by Euan Fleming , D. S. Prasado Rao , Pauline Fleming. July 2006 100 pp., 6 1/4" x 9 1/2"
Declining Agricultural Commodity Prices 
Productivity Gain or Immiserising Growth?