|Aid to Agriculture: Reversing the Decline - Food Policy Report (IFPRI, 1993, 24 p.)|
Agriculture is also the largest private business sector in low-income countries. For agricultural growth, market-friendly national macroeconomic and trade policies are necessary. But to a large extent the forces that stimulate agricultural growth, including research for technological innovation, extension, infrastructure, and finance, depend on sustained long-term public action, which is critical for profitable private investment.
International development cooperation that draws on international know-how can help overcome domestic financial, technical, and human resource constraints that hamper the ability of developing-country governments to provide the required public goods. This is the key rationale for international assistance to agricultural development. Improvements in the world food situation during the past three decades are more the result of external financial assistance to agricultural development than of food aid.
But what is the most appropriate level of assistance to agriculture in the 1990s? It depends on the economic returns to such investments and on the projected need for food, which will be driven by population and income growth and by the nature and level of assistance to the poor. It also depends on economic growth in developing countries and their ability to assume the funding burden.