Key Concepts in Agrarian Systems and Economic Development

Agrarian system

The pattern of land distribution, ownership, and management, and also the social and institutional structure of the agrarian economy.

Cash crops

Crops produced entirely for the market.

Diversified (mixed) farming

The production of both staple crops and cash crops and simple animal husbandry typical of the first stage in the transition from subsistence to specialized farming.

Family farm

A farm plot owned and operated by a single household.

Green revolution

The boost in grain production associated with the scientific discovery of new hybrid seed varieties of wheat, rice, and corn that have resulted in high farm yields in many developing countries.

Integrated rural development

The broad spectrum of rural development activities, including small-farmer agricultural progress, the provision of physical and social infrastructure, the development of rural nonfarm industries, and the capacity of the rural sector to sustain and accelerate the pace of these improvements over time.

Interlocking factor markets

Factor markets whose supply functions are interdependent, frequently because different inputs are provided by the same suppliers who exercise monopolistic or oligopolistic control over resources.

Landlord

The proprietor of a freehold interest in land with rights to lease out to tenants in return for some form of compensation for the use of the land.

Land reform

A deliberate attempt to reorganize and transform agrarian systems with the intention of fostering a more equal distribution of agricultural incomes and facilitating rural development.

Latifundio

A very large landholding found particularly in the Latin American agrarian system, capable of providing employment for more than 12 people, owned by a small number of landlords, and comprising a disproportionate share of total agricultural land.

Medium-size farm

A farm employing up to 12 workers.

Minifundio

A landholding found particularly in the Latin American agrarian system considered too small to provide adequate employment for a single family.

Moneylender

A person who lends money at high rates of interest, for example to peasant farmers to meet their needs for seeds, fertilizers, and other inputs.

Scale-neutral

Unaffected by size; applied to technological progress that can lead to the achievement of higher output levels irrespective of the size (scale) of a firm or farm.

Sharecropper

A tenant farmer whose crop has to be shared with the landlord, as the basis for the rental contract.

Shifting cultivation

Tilling land until it has been exhausted of fertility and then moving to a new parcel of land, leaving the former one to regain fertility until it can be cultivated again.

Specialized farming

The final and most advanced stage of the evolution of agricultural production in which farm output is produced wholly for the market.

Staple food

A main food consumed by a large portion of a country's population.

Subsistence farming

Farming in which crop production, stock rearing, and other activities are conducted mainly for personal consumption.

Tenant farmer

One who farms on land held by a landlord and therefore lacks ownership rights and has to pay for the use of that land, for example, by giving a share of output to the owner.

Transaction costs

Costs of doing business related to gathering information, monitoring, establishing reliable suppliers, formulating contracts, obtaining credit, and so on.

Global warming

Increasing average air and ocean temperatures. Used in reference to the trend that began in the mid twentieth century and attributed largely to human industrial, forestry, and agricultural activities emitting greenhouse gases.

Climate change

Nontransient altering of underlying climate, such as increased average temperature, decreased annual precipitation, or greater average intensity of droughts or storms. Used in reference to the impact of the global warming phenomenon.

Environmental accounting

The incorporation of environmental benefits and costs into the quantitative analysis of economic activities.

Environmental capital

The portion of a country's overall capital assets that directly relate to the environment—for example, forests, soil quality, and groundwater.

Sustainable development

A pattern of development that permits future generations to live at least as well as the current generation, generally requiring at least a minimum environmental protection.

Sustainable net national income (NNI*)

An environmental accounting measure of the total annual income that can be consumed without diminishing the overall capital assets of a nation (including environmental capital).

Environmental Kuznets curve

A graph reflecting the concept that pollution and other environmental degradation first rises and then falls with increases in income per capita.

Biomass fuels

Any combustible organic matter that may be used as fuel, such as firewood, dung, or agricultural residues.

Desertification

The transformation of a region into dry, barren land with little or no capacity to sustain life without an artificial source of water.

Soil erosion

Loss of valuable topsoils resulting from overuse of farmland, and deforestation and consequent flooding of farmland.

Deforestation

The clearing of forested land either for agricultural purposes or for logging and for use as firewood.

Marginal cost

The addition to total cost incurred by the producer as a result of increasing output by one more unit.

Producer surplus

Excess of what a producer of a good receives and the minimum amount the producer would be willing to accept because of a positive-sloping marginal cost curve.

Consumer surplus

Excess utility over price derived by consumers because of a negative-sloping demand curve.

Scarcity rent

The premium or additional rent charged for the use of a resource or good that is in fixed or limited supply.

Present value

The discounted value at the present time of a sum of money to be received in the future.

Marginal net benefit

The benefit derived from the last unit of a good minus its cost.

Externality

Any benefit or cost borne by an individual economic unit that is a direct consequence of another's behaviour.

Internalisation

The process whereby external environmental or other costs are borne by the producers or consumers who generate them, usually through the imposition of pollution or consumption taxes.

Public good

An entity that provides benefits to all individuals simultaneously and whose enjoyment by one person in no way diminishes that of another.

Public bad

An entity that imposes costs on groups of individuals simultaneously.

Free-rider problem

The situation in which people can secure benefits that someone else pays for.

Private costs

The direct monetary outlays or costs of an individual economic unit.

Pollution tax

A tax levied on the quantity of pollutants released into the physical environment.

Social cost

The full cost of an economic decision, whether private or public, to society as a whole.

Clean technologies

Technologies that by design produce less pollution and waste and use resources more efficiently.

Absorptive capacity

The capacity of an ecosystem to assimilate potential pollutants.

Greenhouse gases

Gases that trap heat within the earth's atmosphere and can thus contribute to global warming.

Biodiversity

The variety of life forms within an ecosystem.

Global public good

A public good, whose benefits reach across national borders and population groups.

Debt-for-nature swap

The exchange of foreign debt held by an organisation for a larger quantity of domestic debt that is used to finance the preservation of a natural resource or environment in the debtor country.

Aggregate growth model

A formal economic model describing growth of an economy in one or a few sectors using a limited number of variables.

Comprehensive plan

An economic plan that sets targets to cover all the major sectors of the national economy.

Corruption

The appropriation of public resources for private profit and other private purposes through the use and abuse of official power or influence.

Cost-benefit analysis

A tool of economic analysis in which the actual and potential private and social costs of various economic decisions are weighed against actual and potential private and social benefits.

Economic infrastructure

The capital embodied in roads, railways, waterways, airways, and other forms of transportation and communication plus water supplies, electricity, and public services such as health and education.

Economic plan

A written document containing government policy decisions on how resources will be allocated among various uses so as to attain a targeted rate of economic growth or other goals over a certain period of time.

Economic planning

A deliberate and conscious attempt by the state to formulate decisions on how the factors of production will be allocated among different uses or industries, thereby determining how much of total goods and services will be produced in one or more ensuing periods.

Exchange rate

Rate at which the domestic currency may be converted into (sold for) a foreign currency such as the U.S. dollar.

Government failure

A situation in which government intervention in an economy worsens outcomes.

Input-output model (interindustry model)

A formal model dividing the economy into sectors and tracing the flow of interindustry purchases (inputs) and sales (outputs).

Internal rate of return

The discount rate that causes a project to have a net present value of zero, used to rank projects in comparison with market rates of interest.

Market failure

A phenomenon that results from the existence of market imperfections (e.g., monopoly power, lack of factor mobility, significant externalities, lack of knowledge) that weaken the functioning of a market economy.

Market prices

Prices established by demand and supply in markets.

Net present value

The value of a future stream of net benefits discounted to the present by means of an appropriate discount (interest) rate.

Nongovernmental organizations (NGOs)

Nonprofit organizations often involved in providing financial and technical assistance in developing countries.

Partial plan

A plan that covers only a part of the national economy (e.g., agriculture, industry, tourism).

Path dependency

A condition in which the past condition of an individual or economy, measured by the level of one or more variables, affects future conditions.

Planning process

The procedure for drawing up and carrying out a formal economic plan.

Political will

A determined effort by persons in political authority to achieve certain economic objectives through various reforms.

Project appraisal

The quantitative analysis of the relative desirability (profitability) of investing a given sum of public or private funds in alternative projects.

Rent seeking

Efforts by individuals and businesses to capture the economic rent arising from price distortions and physical controls caused by excessive government intervention, such as licenses, quotas, interest rate ceilings, and exchange control.

Shadow prices (or accounting prices)

Prices that reflect the true opportunity costs of resources.

Social profit

The difference between social benefits and social costs, both direct and indirect.

Social rate of discount

The rate at which a society discounts potential future social benefits to find out whether such benefits are worth their present social cost.

Voluntary failure

The inability of nongovernmental organizations and the citizen sector more broadly to efficiently achieve social objectives in their areas of supposed comparative advantage.

Absolute advantage

Production of a commodity with the same amount of real resources as another producer but at a lower absolute unit cost.

Autarky

A closed economy that attempts to be completely self-reliant.

Balanced trade

A situation in which the value of a country's exports and the value of its imports are equal.

Barter transactions

The trading of goods directly for other goods in economies not fully monetized.

Capital account

The portion of a country's balance of payments that shows the volume of private foreign investment and public grants and loans that flow into and out of the country.

Commodity terms of trade

The ratio of a country's average export price to its average import price.

Common market

A form of economic integration in which there is free internal trade, a common tariff, and the free movement of labor and capital among partner states.

Comparative advantage

Production of a commodity at a lower opportunity cost than any of the alternative commodities that could be produced.

Current account

The portion of a country's balance of payments that reflects the market value of the country's 'visible' (e.g., commodity trade) and 'invisible' (e.g., shipping services) exports and imports.

Customs union

A form of economic integration in which two or more nations agree to free all internal trade while levying a common external tariff on all nonmember countries.

Depreciation (of currency)

The decline over time in the value or price of one currency in terms of another as a result of market forces of supply and demand.

Devaluation

A lowering of the official exchange rate between one country's currency and all other currencies.

Dual exchange rate (parallel exchange rate)

Foreign exchange-rate system with a highly overvalued and legally fixed rate applied to capital and intermediate-goods imports and a second, illegal (or freely floating) rate for imported consumption goods.

Economic integration

The merging to various degrees of the economies and economic policies of two or more countries in a region.

Economic union

The full integration of two or more economies into a single economic entity.

Effective rate of protection

The degree of protection on value added as opposed to the final price of an imported product—usually higher than the nominal rate of protection.

Enclave economies

Small, economically developed regions in developing countries in which the remaining areas have experienced much less progress.

Exchange control

A governmental policy designed to restrict the outflow of domestic currency and prevent a worsened balance of payments position by controlling the amount of foreign exchange that can be obtained or held by domestic citizens.

Export dependence

A country's reliance on exports as the major source of financing for development activities.

Export earnings instability

Wide fluctuations in developing country earnings on commodity exports resulting from low price and income elasticities of demand leading to erratic movements in export prices.

Export promotion

Governmental efforts to expand the volume of a country's exports through increasing export incentives, decreasing disincentives, and other means in order to generate more foreign exchange and improve the current account of its balance of payments or achieve other objectives.

Factor endowment trade theory

The neoclassical model of free trade, which postulates that countries will tend to specialize in the production of the commodities that make use of their abundant factors of production (land, labor, capital, etc.)

Factor price equalization

In factor endowment trade theory, the proposition that because countries trade at a common international price ratio, factor prices among trading partners will tend to equalize