IS SMALL STILL BEAUTIFUL? 5


socioeconomic and biophysical variables such as popula- tion density, agricultural potential (determined by agro- ecological conditions such as water supply, soil fertility, and biotic pressures from pests and diseases), and market access (Omamo et al. 2006). Other determinants of small- holder livelihood strategies include the asset position of households and the characteristics of the production envi- ronment (including institutions, power structures, and mar- ket policies). Within this typology, subsistence farmers are smallhold-


ers who consume the majority of their farm output and who are held back from participating more actively in com- mercially oriented agriculture by a variety of constraints. Te potential to turn production systems into profitable enterprises is greatest among the subsistence farmers who are facing soſt constraints—such as limited financial and human capital and asymmetric access to markets and infor- mation—that can be addressed through various policy and programmatic channels. In addition to soſt constraints, the presence of hard constraints—such as marginal lands that are far from markets, are limited in size, and have extremely low rainfall and soil quality—severely hampers the ability of other smallholders to increase their production capac- ity and move toward profitable farming systems. Com- mercial smallholders are already involved in profitable agricultural activities but are held back from scaling up their


commercial activities by factors such as limited access to capital and risk-reducing tools. Second, the appropriate development pathway for


smallholder farmers also depends on the level of transfor- mation within the country’s economy. Te transformation process involves increased productivity and commercializa- tion in agriculture alongside economic diversification and growth. Te exact duration and character of the transforma- tion varies across developing countries, but it includes sev- eral fundamental changes in the structure of the economy: a declining share of agriculture in gross domestic product (GDP) and employment, increasing rural-to-urban migra- tion, the rise of a modern industrial and service economy, and a demographic transition to lower birth and death rates (Timmer 1988). In the typology, agriculture-based econ- omies are those that derive a significant portion of their economic output and growth from the agricultural sector. Tis group includes most countries in Africa south of the Sahara. Transforming economies, which lie mainly in East and South Asia, are those in which agriculture’s significant role is being gradually replaced by the manufacturing and service sectors, although poverty continues to be heavily concentrated in rural areas. Finally, transformed countries, which are mainly in Eastern Europe and Latin America, are those in which agriculture has become a minor source of economic growth.


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