Abstract: As countries develop, their labor force shifts from agriculture to industry and services, and in the process, the well-being of the people improves. This essay sheds some light on the economic logic that drives the process and on the important role that agricultural productivity plays in it. It argues that agricultural productivity growth is the key to poverty alleviation, and then discusses the policy implications for developing countries. The first section shows how the process of secular decline in poverty is inevitably associated with a movement of labor from agriculture to other sectors, and how agricultural productivity growth facilitates such a movement. The second section discusses the importance of international trade in this process. Both agricultural and trade policies tend to generate political battles because they redistribute incomes from one group to another. This political economy question is addressed in the third section, which also discusses the causes (and consequences) of the observed policy bias against agriculture. The fourth section discusses the two main determinants of agricultural growth-technology and crop diversification, and reflects on the policy options available to poor countries to induce agricultural growth without causing domestic upheavals.

Keywords: agricultural productivity growth, poverty alleviation, international trade, developing countries, policy bias,