World Food Policy WFP Volume 4, No. 2, Spring 2018 | Page 39

Facilitating Inclusive Rural Transformation in the Asian Developing Countries
2.1. Structural transformation
faster ST, reflecting the well document-
ed multiplier effects of agriculture in
industry and services (Johnson and
Mellor, 1961; Schultz, 1964; Johnson,
1970; Timmer, 2009). These include:
a) the releases of surplus labor for in-
dustry and services; b) producing low
cost food which keeps wages down for
workers in the industrial sector; c) pro-
ducing fiber and other crops that can be
inputs to production in other parts of
the economy; d) supplying exportable
commodities that can help finance im-
ports of key technology packages and
capital equipment; and e) raising rural
incomes that can increase demand for
industrial products.
Asian developing countries have un-
dertaken smoothly ST since 1980s. Fig-
ure 1 shows the trends of ST in thirteen
developing countries in Asia. Across
countries, higher income is generally
associated with lower share of agricul-
ture in overall GDP; within a country,
rising income is accompanied by the
fall in agricultural GDP share over time;
moreover, the gap between agricultural
GDP share and agricultural employ-
ment share tends to converge with the
process of structural transformation.
The trends observed from Figure 1 con-
firms the findings of ST advanced by
Timmer (2009 and 2014).
The convergence of agricul-
tural GDP and employment shares in
the economy suggests that agricultur-
al productivity growth and ability of
non-agricultural sector to generate em-
ployment for rural labor are essential
for the rapid structural transformation.
Figure 1 also shows that the stage and
speed of ST differ largely among coun-
tries. The most rapid structural trans-
formations have occurred in Malaysia,
Thailand and China. Malaysia in the
1990s, Thailand in the early 2000s, and
China in recent years had reached the
Lewis Turning Point. After reaching
this stage, agricultural employment as
a percentage of total employment tends
to fall faster than agricultural GDP
share, which ultimately closes the gap
between the two ratios.
2.2. Rural transformation
Rural transformation includes both
transformation within agricultural
structure and from farm and off-farm
employment. On RT within agricul-
ture, we use the share of gross value of
non-cereal products in total agricul-
tural output value to measure RT. For
off-farm employment, because data on
off-farm employment over time are not
available for most countries studied,
only descriptive discussions are pro-
vided.
Within agriculture, the trans-
formation has been occurring in many
countries. In response to food demand
and marketing transitions, agriculture
has gradually been moving from large-
ly food grain based products to high-
er-value crops, livestock and fishery
in most countries in Asia (Figure 2).
But the speed of transformation differs
among countries. More rapid transfor-
While not showed in Figure 1,
the countries with higher agricultur-
al growth are often associated with
higher growth of overall economy and
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