Agriculture and Economy of a Country

About this essay

In South Africa, agricultural co-operatives have been established to improve the livelihoods of the rural community. At the same time, the government has invested in the steel industry, aiming to create jobs and thereby raise standards of living. In Brazil, small co-operatives have also been established. A contrasting approach to agricultural development is export orientated agriculture in Puerto Rico. In Vietnam, a bottom up approach to developing rural areas is a credit and savings program dedicated at the poorest people. A top down rural development project in brazil aims to create jobs and provide land.

Both bottom up and Top down approaches have advantages and disadvantages. Bottom up approaches tend to benefit the poorest people while top down approaches improve the infrastructure of a country.


There are two broadly different approaches to development at a national level. This report evaluates their potential for development. Main features of the two approaches.

  • “Bottom up” Development – Non-governmental organisations (NGO’s) are often involved in bottom up strategies.

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  • “Top down” Development – They give financial aid and technical expertise.
  • “Grass roots” Development. – “Government led” Development
  • People centred, concentrating on helping people to help themselves. – Concerned With the management of the economy as a whole.
  • Encourages the involvement of local people. – Governments make decisions with little participation from local people.
  • Involves individual community projects. – Involves major industrial initiatives.
  • Benefits people at the local level. – Hope that economic development will “trickle down” to regions and local areas

It is recognized that there is a difference between aid and investment.

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Foreign aid is defined as a flow of official capital to LEDCs that has a non-commercial, non-military, and pro-development objective from the point of view of the donor and features concessional interest rates and/or repayment periods. Foreign investment is defined as acquiring capital in a foreign country. This could be an investment in capital, like stocks, or a direct investment in production facilities.

There are three main ways to give aid. Main advantages and disadvantages of bilateral aid, multilateral aid, and non governmental organisations.

  • Type of aid: Bilateral
  • Definition: Assistance given directly from a donor government to a recipient country
  • Advantages: The recipient country can get a substantial sum of money to invest in their country.
  • Disadvantages: Can set up advantages for the industries in both countries, as the donor becomes a market place for products from the recipient.

Bilateral aid is often

“Tied,” meaning that the donor government puts conditions on the aid that require funds to buy products or services.

Alternatively encouraging the developing country to purchase machinery creates future demand for spares or experts which the country would have to purchase from the donor.


  • Aid administered by international institutions which collect resources from multiple countries and redistribute them to recipients.
  • Can lead to the establishment of stable industry.
  • Money can and has been used to improve schools, health care and the economy.
  • The amount of money is substantial and can be used to finance development the country could otherwise not afford.
  • Governments in some developing countries tamper with their indicators of development to make them appear poorer than they are so they receive extra aid payments.
  • Projects encouraged are often inappropriate to the needs of the poorest e.g. a new international airport.
  • Debt repayments can massively outweigh any aid received.

Non -governmental-governmental:

  • More responsive to the immediate needs of the population. Work at a smaller scale using technology more appropriate to the skills and needs of the locals
  • Good at setting up initiatives at local levels so that the community can develop their own industries
  • Countries can become too dependent on aid rather than looking to establish their own economies.

Two contrasting development projects in South Africa

Bottom up – The Hertzog agricultural cooperative (HACOP)

Following the end of apartheid in South Africa, local communities started to take up the challenge of development. The most successful initiative was HACOP, which was established by black former farm workers in 1994.Community workshops were held, leading to the recognition that the farmland and irrigation infrastructure abandoned by white tobacco farmers could be put back in place now apartheid restrictions no longer existed.

The state granted HACOP access to the land for 10 years, the Ciskei agricultural bank gave them a loan and a European organisation donated pumping and irrigation equipment. HACOP members own and administer ploughing and harvesting services, and maintain the irrigation pumps and piping. Intensive market gardening produces good quantities of produce which is sold to traders who come from up to 300km away. Community members help each other in labour intensive activities such as ploughing, seeding, spraying and harvesting. The scheme has transformed the economy of the community. HACOP is widely recognised in South Africa as a success story. It has been favoured by a number of locally specific factors, such as the availability of good quality farmland, farming skills and the existing irrigation equipment.

This scheme has had many advantages. Levels of education and nutrition in the community have improved and people have renovated their homes and increased their purchases of clothing and furniture. Spin-offs in the local community have also been generated, such as the establishment of a small wire fence making business and a workshop making metal household goods. Disadvantages of the scheme are that it only benefits a small group of people, and does not affect the rest of the region.

Top down -The West Coast Investment Initiative, South Africa

In 1996 South Africa’s department of trade and industry established of a number of “spatial development initiatives” (SDI’s) across the country, in areas which it identified as having “unlocked economic development potential”. One SDI, was the West coast investment initiative (WCII), was designated in western Cape Province, located 50km north of Cape Town. The main project of WCII has been the saldanha sands mini mill steel project. The existence of a deep-water harbour and a railway line running to the iron ore mine at Sishen were key locational factors. Advantages included the jobs created. The construction phase of the mill employed 9,000 people and the operational phase employs 600 people directly, with a further 2,000 related jobs in the local service economy. Related economic activities have been attracted to the region, which are estimated to have added 10% to local economic growth in the late 1990’s

Disadvantages were that of the original investment 40% “leaked” overseas to pay for imported industrial technology, and that the end of the construction phase caused unemployment. Forty-six local businesses closed in the first 3 months of 2000 as the effects of the local slump spread. In addition, the high tech nature of steel production has required a workforce with skills that are not readily available in the area, leading to the migration of skilled workers into the area.

Two contrasting approaches to agricultural development

Bottom up – Agrarian Foundation of Tochantins – Agraguai (FATA), Brazil

In 1988 four rural workers unions founded the Agrarian Foundation of Tochantins-Agraguai (FATA) in the northern province of Para. With the support of Christian aid (an NGO), FATA is funding sustainable development for the small-scale farmers devoted to growing rice and sugar cane in the area. Between 12000 and 15000 peasant families directly benefit from the project. Collectively, the farmers decide which types of crop they will grow and the scale of production.

To help them, FATA has created small farmers cooperative where the farmers develop strategies for marketing rice and avoid any costly middle sales person. This means that the farmers receive most of the profit from the sale of their crops. In addition, FATA has built a research and training complex where courses are held on relevant topics for small- scale farmers. The success of FATA shows that large scale and export orientated agriculture is not the only way to improve living standards. The following case study looks at the merits of export orientated agriculture.

Top down – Export orientated agriculture in Puerto Rico

Until the beginning of the 19th century, the economy of Puerto Rico was one of subsistence without any central guidance. The Spanish first introduced large-scale agriculture, primarily sugar plantations, as early as the 16th century, but a real commercial, export-oriented economy was not developed until the 19th century. After the United States invasion in 1898, there was increased interest in developing Puerto Rico’s agricultural export potential.

Between 1898 and 1930 sugar output increased by 900 percent and accounted for 40 percent of cultivated land, almost 50 percent of agricultural labour, and more than 30 percent of Puerto Rico’s economic activity. United States corporations arrived with ready cash in the early 1900’s and bought a great quantity of land for the production of sugar cane. Despite the dramatic growth in both sugar and tobacco output between 1898 and 1930, Puerto Rico experienced increasing economic problems because of the drop in price of these commodities on the world market and powerful competition from Caribbean and South American neighbours.

Two contrasting approaches to rural development

Bottom up – CIDSE development plan, Vietnam

Women are poorer than men and hold lower status in Vietnamese society. Nearly three quarters live in rural areas. Credit is traditionally limited for women; banks do not locate in the poorest and most remote areas in which those most in need of assistance live. The poorest women borrow from private moneylenders who charge interest rates of up to 20% per month.

CIDSE, a group of catholic development agencies, began a development plan in Vietnam in the 1970’s. In 1992 it began a credit and savings programme targeted at the poorest people, which has since spread. Its objectives are:

  • Providing affordable credit to the poor through income generating activities, as an alternative to moneylenders.
  • Helping to tackle high unemployment rates
  • Helping to organise people into self supporting groups

It focuses upon small loans to poor women who support each other in groups. By 1996, it had loaned over US $250 000 to 6700 people across the country. Most importantly, the repayment rates exceed 95 per cent. This scheme allowed poor women who could not otherwise get loans to borrow money at lower interest than charged by private moneylenders.

Top down – The Polonoroeste Project, Brazil

In 1982 the world bank lent Brazil US$443 million for this scheme which aimed to ease population pressure in Brazil’s crowded south east and to provide land for migrants from the south who had lost their jobs as a result of agricultural mechanisation. It involved a major national advertising programme to attract Brazilians to this new frontier. A 1500km highway and access roads were built through the heart of the Amazon basin. Landowners bought massive areas of deforested land and converted them for commercial agriculture and TNCs built new factories.

There were many problems with the polonoroeste project. Migrants found the lands to be unsuitable for settlement and agriculture because even after one harvest the delicate Amazon soils became unproductive. Only shifting cultivation is sustainable because it allows the rainforest time to restore itself. Many migrants were therefore forced to sell their land and return to the cities looking for work. Thousands of people were forced to find waged labour in local factories or on cattle ranches. In addition to these problems indigenous tribes in the area were threatened by exposure to disease and hundreds of plant and animal species unique to the rich rainforest ecosystem are at risk of extinction.


This report has shown that both approaches to development have advantages and disadvantages. Bottom-up schemes such as the Hertzog agricultural cooperative help the smaller communities to prosper, but they do not however, improve the complicated infrastructure of a country. Top-down development such as the west coast investment initiative improves the economy of a country but often does not benefit the poorest of people.

Sometimes a “bottom up” approach is best; sometimes a “top down” approach may be more beneficial, depending on the situation. Large inequalities in development can only be tackled through bigger projects like the polonoereste project in Brazil, although these often have many problems. Bottom up approaches are more likely to benefit the poorest people but will not solve the problem of poverty on a larger scale. The two approaches are not mutually exclusive. It is suggested that development progress will only be achieved when “top down” meets “bottom up” and there is a working relationship between local organisations and larger investors.

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Agriculture and Economy of a Country. (2020, Jun 01). Retrieved from

Agriculture and Economy of a Country

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