The Impact of Foreign Capita Transfers on Developing Country Agriculture
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Publisher:Ohio State University. Department of Agricultural, Environmental, and Development Economics
Series/Report no.:Ohio State University. Department of Agricultural Economics and Rural Sociology. ESO (Economics and Sociology Occasional Paper). No. 1143
The impact of foreign capital transfers on developing country agriculture is examined for 13 major borrowers during the period 1973-82. Large foreign capital transfers permit over-valued exchange rates to develop or continue, and these penalize agriculture by reducing the incentives to export and by increasing the incentives to import. Results indicate that an increasing ratio of foreign debt to GNP is associated with an increasing ratio of agricultural imports to GNP and a decreasing ratio of agricultural exports to GNP. It is concluded that further borrowing by debtburdened countries is unlikely to solve their basic problems unless accompanied by the appropriate economic policy changes necessary for long-term economic growth.
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