7.1 Introduction
Globalization refers to increases in the movement of finance, inputs, output, information, and science across vast geographic areas. The gains from globalization increase net income in many places and facilitate decreases in levels of poverty and may thereby increase levels of food security. However, there is an implication of frictionless movement and perfect knowledge that understates the requirements for benefiting from globalization.
These trends have been underway throughout history. As reflected in the previous chapter, they have moved unusually rapidly in recent times because the cumulative breakthroughs in basic science have allowed an extraordinary acceleration in the reduction of transfer costs. Real costs of information transfer and shipment of goods have declined rapidly, while perishability and bulk have been drastically reduced. Concurrently, increases in per capita income in many regions, and in the total size of the market, have allowed scale economies to be achieved for myriad new products, most of which involve value added processes that themselves require investment and improved technology. These rapid changes have allowed a great increase in specialization in agriculture, and consequently lower costs and rapid growth in trade.
Globalization can greatly enhance the role of agriculture as an engine of growth in low-income countries by making it possible for agriculture to grow considerably faster than domestic consumption. It also increases the potential for agriculture to increase food security through enlarged multipliers to the massive, employment-intensive, non-tradable rural non-farm sector. With such potential benefits, it is important to understand what is required for participation and to ensure that the poor and hungry are lifted out of poverty and hunger by these processes.
