Economic and Agricultural Systems: A Global Overview

Posted on Nov 12, 2024 in Geography

Economic Systems

An economic system is the mechanism governing the production and distribution of goods and services to meet human needs. This process has reshaped the international landscape, influencing the economic systems of countries worldwide. These systems affect the interaction of three major processes:

  1. Technological advancements, particularly in information technology.
  2. Globalization of the economy, encompassing the structuring of all economic processes.
  3. The emergence of information technology applied to economic production and administration.

The implementation of an economic system involves the needs of the population, the means to meet them, the workforce, and the resources applied to production and consumption.

Major Economic Systems

  • Free Market (Pure Capitalism/Free Enterprise): All economic decisions are made in markets, where companies offer goods and services (supply and demand), prices are set, and changes occur without state intervention.
  • Planned Economy (Centralized): All economic decisions are made by the state, as seen in socialism.
  • Mixed: A combination of the above systems.

Agricultural Systems in Industrialized Countries

Agricultural activity, particularly in Europe and Anglo-Saxon America, focuses on temperate climates with a predominance of cereals. This activity benefits from scientific and technological advancements, and the low population engaged in it delivers high yields per person due to:

  1. Technological Change: Highly mechanized and technologically advanced.
  2. Scientific Approach: Utilizing laboratories and research.
  3. Seed Selection: Introduction of new plant varieties.
  4. Fertilizer Use: Enhancing soil fertility.
  5. Farmer Training: Technical and scientific preparation.
  6. Profitability: Calculation of profitability as a key factor in crop selection.
  7. Organized Labor: Field work organized like a company, with worker relations similar to those in industrial enterprises.
  8. State Subsidies: Support for agriculture in the U.S. and European Union.
  9. Productivity: Continuous pursuit of greater productivity to compete in global markets.

In the U.S., agricultural landscapes are heterogeneous due to different operating systems. Large farms are organized into corporations, and many are agribusinesses. In the European Union, agricultural policy promotes competitive agriculture capable of supporting the global market while ensuring fair living standards and stable incomes for farmers, using sound production methods.

The Expansion of Consumer Society

Recent times have witnessed substantial changes in supply and demand. Previously, companies produced goods based on market demand. Now, they create demand through advertising, generating the need for products, particularly among young people.

State Intervention

State intervention in economic systems has yielded mixed results. The achievements of some East Asian countries in economic growth and the struggles of African countries have led to a reassessment of the state’s role in economies and its potential contribution to human welfare. States often protect domestic firms and participate as entrepreneurs in infrastructure projects like railways and hydroelectric dams, which may not be profitable for private companies but contribute to public welfare.

The Mixed System with a Socialist Tendency

A planned system organizes society based on collective ownership of the means of production, controlled by the state. The state believes this is the most efficient way to produce, use, and distribute scarce resources. It determines which goods are produced, their production methods, costs, and distribution.

Farming Systems in Agro-Based Countries

Various factors influence agricultural production, including relief, climate, water availability, cultural traditions, land ownership, and economic development. These factors determine the variety of operating systems.

The Temperate Mixed System

This system combines agriculture with animal husbandry, characterized by high capital concentration and technological advancements in mechanization, plant and animal varieties, pest control, and irrigation, contributing to high productivity. Due to low population density, surplus production is exported to European and Asian countries with high living standards, although competition with subsidized farmers in the U.S. and European Union can be challenging.

The Mixed Capitalist System

Within this system, highly industrialized countries enjoy high living standards, while developing countries often face crises due to economies based almost exclusively on agriculture. Capitalist enterprises pursue profit but also face risks and the need for innovation to compete. Competitiveness and productivity drive investment and technological advancements, leading to increased production, variety, and quality. This system exhibits a growing trend towards:

  • Financial concentration
  • Creation of new markets to attract consumers
  • State intervention in the economy

Financial Concentration

Recent decades have seen a process of financial and economic concentration, with individual firms merging into large corporations. This allows them to pool capital, renew technology, and achieve greater productivity. In corporations, capital is contributed by various partners. Forms of business concentration include:

  1. Cartel: An agreement among firms to restrict competition and establish market control without losing economic or legal independence.
  2. Trust: A grouping of businesses that merge into a parent company to establish monopolistic market control, losing their legal personality.
  3. Monopoly: A single company controls the entire supply, acting as the sole supplier and setting prices.

Farming Activities

Agricultural activity encompasses land use systems for agriculture and livestock. Globally, we can distinguish between countries with industrial-based economies and those with agro-based economies. A farming system is the result of natural and human factors employed by societies for food and profit. Among economic activities, agriculture is most dependent on the physical environment, particularly temperature and precipitation patterns. In developed countries, this is often overcome through drought-resistant seeds or shorter growing cycles for cold climates. In contrast, developing countries face challenges like nutrient depletion in soils and inefficient water use, threatening sustainable production.

Plantation Agriculture

Practiced in tropical zones like Ecuador, this type of agriculture is used in the Americas, Africa, and Asia, with production geared towards export. Recent years have seen changes due to fluctuating international market prices, forcing shifts in production methods, such as combining plantations with livestock. Plantation agriculture is characterized by:

  1. Large companies, often transnational, due to high capital investment requirements.
  2. Agribusiness installations near production sites for perishable goods.
  3. Average farm sizes of 300-400 hectares.
  4. Specialized permanent workforce, supplemented by temporary labor.
  5. Scientific agriculture with new species varieties, fertilizer use, and irrigation.

Subsistence Systems

This type of economy involves families utilizing most of their land and labor to produce goods for their own consumption and basic needs. It is practiced in warm regions of Latin America, Asia, Oceania, and Africa. To address challenges, several Latin American countries have implemented land reforms, changing the legal and economic structure of agriculture, particularly land ownership, to improve the situation of farmers and encourage their engagement in rural tasks. Subsistence agriculture includes:

  1. Pastoral nomadism
  2. Slash and burn agriculture
  3. Rainfed farming
  4. Intensive irrigated agriculture

Pastoral Nomadism

Characteristic of cold regions in the northern hemisphere, mountainous terrain, and arid zones, it involves moving animals in search of pasture.

Slash and Burn Agriculture

Practiced in the tropics, it involves:

  • Land clearing by fire
  • Absence of land payment
  • Exclusive use of human labor
  • Use of basic tools like stakes and hoes
  • Short periods of soil occupation interspersed with long fallow periods

To maintain soil fertility, farmers rotate fields instead of crops.

Rainfed Farming

Rainfed subsistence agriculture relies solely on rainfall for moisture, without irrigation. It often involves crop rotation and livestock integration.

Intensively Irrigated Agriculture

Practiced where land is scarce, it aims for high production, primarily cereals and vegetables for domestic consumption, especially rice, which can feed a large population with minimal space. Only a small percentage of production is sold outside the region, but it is still considered subsistence agriculture. Rice cultivation involves sowing in seedbeds and transplanting seedlings, requiring significant labor and resulting in low productivity. Land division into small parcels is another challenge.

Biotechnology

Biotechnology encompasses techniques and procedures used to manipulate living organisms for practical purposes. After World War II, progress accelerated, and a major achievement was the Green Revolution. Biotechnology is applied to improve species and convert agricultural products and waste into food and energy. It is dominated by large companies in developed countries. Currently, there is debate over food biotechnology, with proponents viewing it as crucial for increasing agricultural yields and opponents concerned about potential health consequences, particularly in Europe.

The Green Revolution

This term refers to efforts to increase agricultural production in developing countries through new cereal varieties, including wheat and rice. This required chemical fertilizers, irrigation, and labor-intensive methods, reducing the cost of producing a ton of rice or wheat by about 30%. Gurdev Singh Khush’s new rice varieties doubled global production in twenty years. The current goal is to produce more rice with less land, irrigation, pesticides, and herbicides.

Farm Subsidies

Subsidies are state compensation to farmers, enabling them to compete in the international market under better conditions by lowering production costs and selling prices. This can harm farmers in countries without subsidies, like Argentina, as their products become more expensive and difficult to sell.

The Agricultural Firm

Personnel in agricultural enterprises are selected like in any urban enterprise. As production processes become more complex, teamwork and staff relationships are crucial.

Technological Level: The introduction of sophisticated machinery and computers requires increasingly qualified labor. Agricultural entrepreneurs utilize the internet for information on machinery, seeds, fertilizers, and forecasts, as well as for internal communication between different locations involved in economic activity.

Commercial Level: Farms must meet new demands regarding marketing standards in food production. Complex systems are needed to identify products and connect official control organizations with databases through telecommunications and computing. The 2001 outbreak of mad cow disease led to decreased meat consumption and impacted businesses. Since then, all animal products must be certified for traceability before marketing.