| Modern agriculture is a new type of industry that is supported by postharvest processing,storage and logistics of agricultural products whose essence is to develop the agro-products processing industry.The role played by the agricultural products processing industry in economic development cannot be overemphasized.Its multiplicative power throughout the economy through linkage effects is important to both developing and developed countries.The agro-processing industry has backward linkages with the rural farm communities and forward linkages with the manufacturing industry.These linkages become more so important for developing countries and countries in transition as they promote social and economic development.This study notes that the first stage of development occurs when GDP per capita of a country/region reaches US$1000.At this stage,the investment in the industry is usually small and comes mainly from small business owners and the industry addresses the main issue of food security.The agro-processing industry enters the second stage when GDP per capita ranges between US$3000 and US$10000.During this time,the agro-processing industry reaches a stage of exponential growth;replacing traditional farming and animal husbandry with capital investment coming mainly from industry and commerce.At this time,the country/region will have stepped into the middle-income stage and the main focus for the industry becomes food safety.The final stage occurs when GDP per capita exceeds US$10000.Large-scale enterprises enter the mainstream agro-processing industry turning it into a wealth-creation industry.Innovation and financial capital become the driving wheels of the industry as the country’s main focus shifts to nutrition and health.Based on this theory,this study analyzes and compares developments in agricultural products processing industry in China,UK,USA,Japan,Korea and Malawi;with an emphasis on China’s agricultural products processing industry development and its role towards socioeconomic development.The study used data obtained from the UNIDO Industrial Statistics database(INDSTAT 2 2015_ISIC Rev 3 and INDSTAT 4 2015_ISIC Rev 4),World Banks’ World Development Indicators,FAO,Penn World Tables(PWT9.0),Organisation of Economic Cooperation and Development(OECD)and statistical bureaus of each study country.The data from these sources was augmented by the Barro and Lee(2014)dataset for average years of education and the Groningen Growth and Development Centre 10 industry sector datasets.These sources provided harmonized industrial statistics for the study countries based on number of industry establishments,employment,human capital,wages and salaries,agricultural and agro-processing output values,manufacturing and agro-processing value added and fixed capital formation.Where no data was available,reliance was placed on reviewing the available literature on the particular subject matter.A modified Solow–Swan neoclassical growth model using a Cobb-Douglas production function with constant returns to scale was adopted to determine the contribution of agriculture and agro-processing to economic growth.The contribution of agriculture and agro-processing were modeled through their effects on factor productivity.Since the study used panel data,instead of relying on OLS,the study accounted for unobserved country characteristics by including either fixed or random effects in the model by running three different regressions models:(1)the constant coefficient model,(2)the fixed effect model(FEM)and(3)the random effect model(REM).The study found that growth in agriculture and agro-processing industry as measured by changes in value added were positively and significantly correlated with growth in GDP per capita in all the three models(OLS,FEM and REM).The study also found that growth in value-added services,net value-added manufacturing and capital stock were the other significant determinants of growth in GDP per capita.In addition,OLS regressions for the individual countries showed that growth in value-added agriculture and value-added agro-processing had a positive impact on GDP per capita growth.Apart from being positively correlated,the coefficients for agriculture and agro-processing value added were significant which suggest that any policy interventions directed towards improving agriculture and agro-processing are likely to lead to growth in GDP per capita.The study also used descriptive statistics,ratios and trend analysis to analyze the structure of the agro-processing industry and the Popperian approach to study policy options.Under the Popperian Approach,logical strengths are used to refute instances while knowing that one exception can disapprove a theory as a universal hypothesis,whereas countless confirmations cannot establish the universality of a hypothesis by focusing on refutations of bold conjectures.The structure of the industry showed that the agro-processing industry makes a significant contribution to the manufacturing sector in terms of output values,manufacturing value-added,employment generation and gross capital formation.The employment trend for 1963-2014 period showed that the agro-processing industry was the largest employer in the manufacturing sector in the study countries contributing about 42.7%,40.5%,43.4%,45.5%,41.9% and 88.1% of manufacturing employment for USA,United Kingdom,China,South Korea,Japan and Malawi respectively.The total employment generated by the agro-processing industry showed that during 1963-2014,the industry generated a significant number of jobs for China,South Korea and Malawi.The number of persons engaged in the agro-processing industry grew at an average annual rate of 4.2%,2.1% and 3.4% for China,South Korea and Malawi respectively.The study shows that China’s agro products processing industry has changed significantly and is now more dominant than traditional farming and animal husbandry.However,when compared to industrialized countries at similar levels of GDP per capita,the development of the industry has been lagging behind.Its contribution to manufacturing output,value-added,capital formation and employment is lower than that of the USA,United Kingdom,Japan and South Korea.Further,the productivity of the industry is also low compared to the advanced nations.In terms of financing options and policy support to agriculture and agro-processing industry,the study found that despite there being many parallels between China and the advanced countries,China is lagging behind.While the USA,United Kingdom,South Korea and Japan have liberalized their financial industry,China has most of its financial sector under government control.The other difference is on the implementation of the policies.For China,though policy changes are easily made,their implementation is rather uneven.Following the findings of this study,there is,therefore,a need for China to adjust the inner structure,priority development areas and focal points of its agriculture.The Chinese government should institute management,production and operation systems that will enable the agro products processing industry to play its role of effectively.China should also revise its legislation and policy supporting systems to reflect the changing and important nature of the agro processing industry.Other areas that the Chinese government should relook at include research and development of technology.For the agro-industry to take major strides in contributing to China’s growth,there is need for closer cooperation among national and local research institutes,universities and private bodies to promote the dissemination of agricultural research output that suit regional,national and international characteristics. |
PDF Full Text Request