Can You Explain The Contribution Of Agriculture To Economic Development In Terms Of Marker And Product?

Market contribution:

A rise in rural purchasing power due to agricultural development is a great stimulus to industrial development. The market for manufactured goods is very small in developing countries, where peasants, farm laborers and their families male seventy to eighty percent of the total population, and are too poor to buy industrial products. The basic problem thus is low investment returns caused by the small size of the market. Increase in rural purchasing power caused by expansion of agricultural output and productivity will tend to raise the demand for manufactured goods and extend the size of the market. This will lead to the expansion of market.

Product contribution:

A developing country is likely to specialize in the production of a few agricultural commodities for export. as output and productivity of the exportable goods expand, their export increase and resulting larger foreign exchange earnings. Thus agricultural surplus leads to capital formation when capital goods are imported with this foreign exchange. As development gains momentum due to industrialization, the proportion of agricultural export. In country's total exports is likely to fall, because they are now needed in larger quantities for domestic production of imported articles.

Foreign exchange earnings can be used to increase the efficiency of existing industries and to establish newer ones by importing scarce raw materials, machines, capital equipment and technical know how.

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