Farm size, productivity, and agricultural development

Many economists believe that large farms are more efficient than small farms. The first purpose of this chapter is to demonstrate that this is a myth in poor developing economies, where labor-intensive production methods are employed, by conducting a literature review on the relationship between farm size and productivity. The efficiency of large farms, however, is higher than that of small farms in developed countries, where wage rates are high and mechanization is adopted. The second purpose of this chapter is to point out that if farm size remains small and wage rates continue to increase in high-performing developing countries in Asia, this region will lose its comparative advantage in agriculture and become a major importer of grains.