Fundamental transformations in global economy: The case of the international agricultural sector

Agriculture has always been a significant sector, not only for the economic development of a country but also for the social development and improvement of the lives of its citizens. It has also been beneficial for millions of people through agricultural goods exportations. Since the 1950s, our world has seen a tremendous transformation in the agriculture sector. Many countries have achieved impressive levels of agriculture production, exporting their goods at a global level and boosting the world economy, while other countries in the developing world have managed to some extent, to operate at a sustainable level of food efficiency through agriculture.

After the end of WWII, the period of the 1950s saw the world undergoing a tremendous change in the agricultural sector, producing a technological boom that benefited the farming industry with the introduction of sophisticated machinery and research. Countries like the U.S had the benefit of combining this technological boom with an economic boom, bringing rural life to the same standard of living as the urban life of post-war America. The immediate impact of these changes in the sector was seen with the impressive return of the pre-war trade level in a very short period. According to a report by the Food and Agriculture Organization of the UN, published in 1955, the pre-war period of 1934-1938 saw the global agricultural trade contracting by 4.4%. However, in the period 1952-1954, the international agricultural trade was already 9.2% higher than the period of 1934-1938. The introduction of modern machinery for the sector, the reopening of the world trade routes, and the new opportunities that were given to the farmers were essential factors that contributed significantly to the development of the agricultural sector

The agricultural sector has not only been transformed, but it has also transformed the economy of many countries, especially in the so-called third world. Since the 1970s, a common pattern can be observed in the developing world, where countries are relying on their agrarian economies, where the existence of non-agricultural sectors might not be that developed. In some cases, the success of these agrarian economies was seen in the agricultural exports, which quickly became the primary source of foreign exchange ratings. An interesting case is the rise of Asia in the agricultural export business. The implementation of new technologies that could support self-sustainability for developing countries, had an impact on the imports from Europe. This allowed an increased level of imports from Asia, which was undergoing a process of industrialization, demographic growth, and urbanization.

One can argue that until this day, the success of the agriculture sector in Asia is based on certain aspects of structural transformation. Firstly, agriculture has become the largest employer in Asia and its labor productivity has seen a tremendous rise compared to the rest of the developing world. Secondly, land productivity has increased, primarily thanks to significant technological changes that led to improvements in the structure of traditional crops. Lastly, Asia has experienced a shift from traditional-based products to high-value ones. These aspects can be found mainly in newly industrialized economies like China, South Korea, or Taiwan, which have led an agriculture development-led industrialization pathway. However, in other parts of the world, these transformations did not seem to be as successful. In South America and Africa for example, many governments did not provide the necessary support to farmers and the agricultural sector, opting for policies based on industrialization, resulting in severe penalties for the agro-export sectors. In my view, these discriminations against farmers had different meanings for these continents. In South America, the underdevelopment of the sector had primarily to do with American expansionism, where major corporations from the U.S, like the United Fruit Company, had complete control over the agricultural sector, economically exploiting the Latin American states, forcing the governments to switch their focus to other rising economic sectors, abandoning the farmers in the hands of private commercial enterprises. As for Africa, unfortunately, since the 1960s, many countries have suffered from a series of civil wars and wars against neighboring states, resulting in the decline of support to farmers that saw themselves being left out for the sake of political goals and foreign exploitation.

With the end of the Cold War in the late 20th century, our world has evolved into an interconnected globalized system, where state economies are directly linked with the economies of other states. In the 21st century, there is a common pattern across fast-growth developing countries, that have found fertile ground in the reconstruction of their agricultural sector, giving them a comparative advantage in relative factor endowments, that managed to substantially change their growing economies. This comparative advantage is followed by new key market trends driven by new technological advances. For example, agriculture researchers are using artificial intelligence and data science to make on-farm predictive analytics before delivering the insights that matter in the farming land. Also, the sector is attracting more and more investors willing to invest in the growing AI technologies, that can help the farmers be more apprehensive about using farm analytics to analyze precise field data. These emerging technologies and investments have transformed the global agricultural sector, especially in the Asian continent. In terms of production, China has become the world’s leading producer of agricultural goods, having 7% of the arable land, feeding at least 22% of the world’s population. In the second place, the U.S has managed to be portrayed as a role model for many countries regarding agricultural technology. Since 1990, the U.S has expanded its agricultural sector by 5% every year and that has given them an advantage over China in terms of agricultural exports, being around $150 billion every year. China, on the other hand, exports agricultural goods that account for at least $65 billion.

In some final remarks, I believe that the agriculture sector has again been the center of attention for many countries for two main reasons. First of all, the growing number of the world’s population has sounded an alarm to many countries that now focus entirely on production to feed the growing world population, thus the implementation of new technologies to make this procedure more efficient are in much need. Secondly, climate change plays a significant role, where we have witnessed the ecological damage that can occur, especially in countries in Africa that solely depend on agriculture to contribute to their GDP. The agriculture sector has fundamentally changed since the 1950s. New technologies have been implemented, and new countries have emerged as major contributors to the world’s food production and supply. With that being said, in those 70 years, we also have witnessed many inequalities with many countries being dependent on other countries on the basic needs of food and water. We have transformed the way we see agricultural production, however, we should always consider the socio-political implications behind any fundamental changes that can change the economic status of any country.

Nikita Triandafillidis
Nikita Triandafillidis
Bachelor's Degree in International Relations & Political Science. Columnist focusing on Global Affairs