Economics(Paper-4) - Shivaji University

1) Provision of food to evergrowing population : Growing population of
developing countries leads to increase in demand for food grains that there were two
facts one Growth rate of population ranges from 1.5% to 3% and second is income
elasticity demand for food in developing countries is 0.6%. These two factors tell us the
importance of agriculture in economic development country and the shortage food grains
production. To solve these problems either agricultural marked surplus should be
increased or import the foodgrain from country who possess surplus food grains.
2) Contribution to capital formation : Agriculture is the basic occupation in
developing countries it plays an important role in pushing up the rate of capital formation.
If it fails to do so, the whole process of economic development will be stopped. Thus
now a days agriculture sector playing pivotal role in the development of economy.
3) Supports Industrial Sector : All agro based industries like Sugar, Cotton, Jute
etc are being supported by agriculture sector. In addition to this the raw material and
food stuffs are provided by the agriculture sector.This result in to the development of
industrial sector and in turn the economic development of a country.
4) Employment : In under developed countries Agriculture is basically labour
intensive industry. Most of the rural people seek gainful employment in agriculture. This
is nothing but a income source to the unskilled labour. Such unskilled labourers are
found more in developing country.Thus if the get employment, it leads to rise in income
of the people as well as nation and which can be regarded as important variable in
economic development.
5) Foreign Exchange for the country : Developing countries of the world are
exporting of primary products, which contributes 60 to 70% percent of their total export
earning. Thus the extent of import of capital goods required for industry depends mainly
on the export earnings of the agricultural sector. If the agricultural sector fails to export
largely.The country may face a heavy deficits in the balance of payments.
6) Welfare of the rural people : An increase in rural income is a result of
agriculture surplus which improve rural welfare. Now a days farmers have started
consuming higher nutritional farm products and using the modern amenities as well as
better services such schools health centers etc. Therefore agricultural surplus have
effected the raising the standard of living of the mass of rural people.
C) Role of Industry in Economic Development :
When a country opens number of industry quickly is called industrialization. The
industrialization is the process of manufacturing consumer goods and capital goods
and creating social overhead capital in order to provide goods and services to both
individuals and business. Thus, the following points indicate that how an industry or
industrialization plays a major role in the economic development of developing and
developed countries.
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