The Agroexport economy Is an economic model based on the export of raw materials derived from agricultural products.
The concept began to take shape in the second half of the nineteenth century, mainly in Australia and some central countries in Latin America. Its etymological origin is in the words agro and export.
The first term defines the set of techniques, activities and processes to cultivate or till the land and obtain its raw materials, while the second term refers to the marketing of these goods to foreign countries.
This model had a great boom in Latin America around 1850, when the main agrarian powers became the barn of the world, giving raw materials to the main powers of the planet.
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Functioning of the agro-export economy
The agro-export economy is based on the great variety of products that make up the agricultural sector or the field.
This sector includes grains, fodder, all kinds of orchard, fruit, wood and agricultural products, such as meat, dairy products, oils, preserves and juices.
Producing nations receive, in exchange for their commodities or unprocessed goods (the raw materials cited above), manufactured industrial products and capital, to complete their local economy.
Commodities can be defined as all goods that can be mass produced by man, of which there are huge quantities available in nature.
These can have a very high value and utility, but their specialization or level of development, on the other hand, is very low, which marks the internal industrial development.
In summary, countries with an agro-export economy market these goods or commodities to foreign countries, which then produce more complex products and remarket them at a higher price.
A mixed capital model
In an agro-exporting economy, the capital model could be defined as a mixed one, as it needs the active participation of the State and foreign investors in order to achieve its highest degree of development and specialization possible.
The role of the State
The national State must generate and guarantee stable conditions for production, such as planning transportation and communication, establishing legal norms that regulate the sector, boosting trade and developing strategies for attracting immigrant workers and investors.
Another central factor of local governments is taxes, through which the balances of trade can be equalized so as not to harm producers or workers.
Foreign investments
Foreign capital participates in the model through investment, the creation of advantageous financial situations for both parties, the development of optimal infrastructure for the production and import of raw materials.
Investments can happen in two ways:
- Direct form: companies develop their activity in producing countries, with the establishment of local branches.
- Indirect form: through loans, which force nations to risky indebtedness.
Benefits and prejudices of an agro-exporting economy
This type of economic model guarantees to the producing countries a fluid commercial exchange, a development of the local and regional activities and the insertion in the global economy with an active role.
However, it brings some disadvantages that may affect the industrial, economic, and hence the social circumstances of the commodity exporting nations.
The lack of industrial progress generated by this situation in producing countries often translates into high poverty and inequality, lack of skilled jobs.
In addition, dependence on domestic economic conditions is a constant alarm for producer countries, since their model is based on foreign capital.
On the other hand, the price of raw materials is always lower than that of manufactured products, so that their trade balance can generate high levels of deficit .
The agro-export economy as an open model
The agro-exporting nations are by definition open, because of the openness their local economies need to be able to sustain themselves in the international market.
In addition to discouraging the development of manufacturing and industrial activity, this causes situations of inequality in the levels of exchange if there are no strict and lasting regulations from those in charge of the state.
This situation of financial vulnerability affects to a greater extent the less wealthy regional producers and favors the big capitals.
Crops: Basis of the agroexport model
The crop policy can be a great contribution to the sustainability of the agro-export model. Diversification, the push of specialized sectors and the rotation can bring great Dividends .
Those countries that manage to have a rich range of commodities enjoy a constant flow of trade, without being altered by climatic factors or by the stage of development of crops.
Here too, the role of the State is vital, through the establishment of favorable productive policies for each sector and zone, and the containment before climatic effects that may affect production.
In contrast, when a monoculture strategy is pursued, large returns can be obtained but the long-term costs are dangerous.
The destruction of soils, the accumulation of capital in few producers and the interruption of exports can be a deadly weapon for the type of agro-export models.
Although there are still countries that base their economy on an agro-export model, it is not a form of exclusive exchange but these countries also have an industrial development of their own goods and services.
References
- Argentine economic history in the nineteenth century, Eduardo José Míguez, Siglo XXI, Buenos Aires.
- Economic, political and social history of Argentina, Mario Rapoport, Emece, 2007, Buenos Aires.
- The Refugees of the Agroexport Model - Impacts of I am monoculture in Paraguayan peasant communities, Tomás Palau, Daniel Cabello, An Maeyens, Javiera Rulli & Diego Segovia, BASE Social Investigations, Paraguay.
- Perspectives on the Agro-Export Economy in Central America, Pelupessy, Wim, University of Pittsburgh Press, United States, 1991.