Classification and Roundabout Production in High-value Agriculture: A Fresh Approach to Industrialization

Abstract

Developing countries are balance-of-payments constrained. In this context, high-value agricultural exports can make a greater contribution to structural change than development economists and developing country governments have typically acknowledged. This is thanks to dramatic recent changes in agricultural production, consumption and trade. These transformations are obscured by a simple classification system that has not adapted to changing patterns of global capitalist production. This article examines some recent efforts to rethink the basis of economic classification; it contributes to this emerging literature by proposing a way to think about the distinctions among economic activities that builds directly from the observation of production rather than a method of ex-post mapping of trade data. A more accurate classification of economic activities would, the authors suggest, help policy officials design more coherent and growth-enhancing industrial policies in support of accelerated structural change and productivity growth. The article draws on primary fieldwork in Ethiopia in particular, but also on fieldwork in South Africa and on secondary evidence.