Abstract
Agriculture can speed economic transformation by financing capital for the urban sector. Some countries have extracted massively from agriculture in the context of little or no agricultural growth. The result has been reduced income in agriculture and even massive starvation. Overvalued exchange rates as a means of extracting from agriculture often have an unfavorable effect on agricultural growth. A contribution from agriculture has quite a different impact when agricultural productivity is growing rapidly through technological change. Taiwan illustrates how a wide variety of mechanisms for capital transfer from agriculture played a substantial positive role in the development of the urban industrial sector. A comparative statement of the role of trade in a rapid agricultural growth strategy is presented.
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Mellor, J.W. (2017). Capital Formation and the Exchange Rate. In: Agricultural Development and Economic Transformation. Palgrave Studies in Agricultural Economics and Food Policy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-65259-7_5
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DOI: https://doi.org/10.1007/978-3-319-65259-7_5
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