In most countries, labor productivity is lower in agriculture than in the non-agricultural sector. This agricultural productivity gap (APG), moreover, is substantially larger in developing countries, as can be observed from Figure 1. For example, the average APG in the poorest decile of countries is 7.8 higher than in the richest decile of countries. This enormous difference is a key piece in the development puzzle given that farming accounts for 73% of employment in the poorest economies. Is their low agricultural productivity the result of any particular policies? And, if yes, do these policies account for a major loss in aggregate output?
Focus paper can be downloaded here [pdf].