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By Bonni J. Van Blarcom, Odin Knudsen, John D. Nash

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In contrast, a group of 15 industrial countries devoted less than half this amount to agriculture (3 percent). 5 percent. In terms of agricultural GDP, developing country governments spend about $1 for every $10 of net agricultural production value, industrial countries $1 for every $5. Obviously, these should not be considered as standards for appropriate levels of expenditure. Individual country circumstances, priorities, and returns to investments should serve as a guide for agricultural expenditure.

While there have been many detailed studies of public spending in individual countries, few have focussed on the agricultural sector, and fewer still have done so in a comparative cross-country context. But this kind of study can help to better understand the links between structural adjustment and public spending policy in agriculture, and to suggest ways in which the two can be mutually supportive. This paper examines in depth the experiences of five countries with reforms of agricultural expenditure policy, and more broadly the experiences of many other countries.

Stop the Fiscal Drain of State Agricultural Enterprises State-owned enterprises in developing countries often operate inefficiently, require large fiscal transfers to cover their losses, and create distortions in incentives. Interventions from state-owned enterprises may involve direct financing, credit guarantees, or statutory authority to control trade in agricultural goods. Two common expenditure-related reforms designed to stem the resource flow and improve overall economic efficiency are privatization of commercial operations and price liberalization.

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