Economic environment and agricultural development: The importance of macroeconomic policy

This article explores the ways in which the macroeconomic balance of the economy, and related policies, impinge on agriculture in developing countries, and considers implications for the design of policies. It argues that the extent of macroeconomic balance, and the quality of the policies influencing that balance, to a large extent define the scope for effective agricultural policies. The avoidance of severe balance-of-payments deficits and rapid inflation are seen as a necessary condition for the promotion of agricultural growth. They also have an important influence on the nature and range of agricultural policy options available to governments.