On Planning in Pakistan (Review Article)

Aftab Ahmad Khan

Abstract


During the past decade, increasing attention has been given to
the role of agriculture in the process of economic development. One
aspect of the discus¬sion has concerned the significance of relative
prices for farmer in decision¬making. Recent studies have yielded
estimates of supply elasticities for jute in East Pakistan, and for
cotton, wheat, and several other crops in West Pak¬istan, so that a
basic body of information is beginning to emerge. The main purpose of
this note is to supplement these studies by presenting estimates of the
price elasticity of supply for rice in East Pakistan. However, since
rice and jute are the main alternate crops in East Pakistan, supply
elasticities for jute will also be presented. Because of fluctuations in
agricultural yields due to variations in weather conditions, the acreage
response to price has generally been estimated rather than the output
response. Significant changes in the size and timing of the monsoon
rains in East Pakistan make it particularly important in this case to
use acreage changes as a measure of farmer response to price. Inputs
others than land, such as fertilizers, better seeds, and
plant-protection measures are not widely used in East Pakistan; and
apparently, these measures are not very responsive to price changes. At
least, no statistically significant relationship exists between the
relative price of rice (to jute) in one year and rice yields in the next
year. An increased price for rice results in an extension of rice
acreage,) but it does not result in significantly more intensive
cultivation. Under these conditions, the price elasticity of acreage
closely approximates the elasticity of planned output2

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DOI: https://doi.org/10.30541/v4i1pp.107-121

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