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ESSAY 4 : THE CASE OF GRENADA

The reason for Grenada’s poverty is complicated. It is associated with economic and
historical factors, as well as the country’s vulnerability to natural disasters. According to report
by World Bank, 32% of the Grenada’s population is poor and 13% are extremely poor. Poverty
incidence in Grenada is mainly a rural problem wherein rural people are isolated from the
mainstream economy which is reliant on international trade (Mark, 2011).

Around 65% of the Grenadian population lives in rural areas (Trading Economics, n.d.). This
population is highly dependent on agriculture for income and subsistence. Having limited skills
and education, many find it difficult to connect with the non-agriculture income and
employment. Land holdings tend to be small and approximately, 90% of the total farms in
Grenada are small farms of less than 2 hectares. At an individual basis, farmers find it difficult to
escape poverty due to vulnerability in natural disasters, illiteracy, lack of technical access, and
lack of access to productive resources. The ability of the Grenadian producers/farmers to achieve
and maintain its competitive position in the market is also constrained by limited economic
infrastructures and operational institutions (International Fund for Agricultural Development,
2007). Moreover, Grenada continues to export agricultural inputs with low added value. Even
though Grenada is the second largest exporter of Nutmeg, it is being exported in raw state for a
low price.

Grenada has a small open economy that had been conventionally dependent on agriculture in
the past for foreign earnings. Its agriculture plays a crucial role in its economy, in terms of
employment, foreign earnings and national savings. Although agriculture share in GDP have
fallen, it still contributes to 78% of total exports and employs 20% of the labor force (Leipzig,
1996). Moreover, agriculture accounts for 8%- 12% on average of the GDP. As such, it is
undeniable that agriculture has a considerable contribution to the Grenada’s economy.

As such, agriculture has a crucial role in changing the quality of life of a large number of
persons, especially people from rural community. The development of agriculture should be an
imperative direction for Grenada since it is one of their important foreign exchange earners.
Moreover, it has the capacity to impact a significant portion of its population which will be able
to contribute to its poverty alleviation, employment generation, and economic growth stimulation
through increased trade.

Increasing agricultural production can significantly augment incomes and employment in the
rural areas, both agriculture and non-agriculture. It could also lower food prices which can
benefit the consumers. The increase in agricultural production could also enhance its exports.
These improvements will not only impact the agriculture sector, but will also influence foreign
exchange earnings. The boost from foreign exchange savings will generate employment and will
stimulate economic activities in rural areas which can alleviate poverty.

An improvement in agriculture sector of Grenada will induce income growth among its poor
population which is mostly concentrated in rural areas and will have a direct effect on poverty
reduction and linkages effect on the rest of the economy. An example of the linkages effect was
the unemployment rate drop from 32.5% in 2013 to 28.9% in 2014 and one of the sectors that
contributed to that decline was agriculture (St. George’s, Grenada, 2015). Moreover, the creation
of opportunities in the rural sector can also be an important tool in controlling migration to rural
areas. There could also be available employment opportunities for the poor and unskilled
workforce in the agriculture sector which can make the economic growth pro-poor.

If GDP share of agriculture increases, it will have a significant effect on the rural area
community since poverty is mostly concentrated there. The growth of the agriculture sector
could increase the demand for both rural and urban services which can create further
opportunities. By adding high value products and services from agriculture sector in the rural
areas, there could be added employment and earnings. In the case of Grenada, their government
had identified that the growth and development in agriculture will eventually lead to linkages in
the manufacturing sector and the tourism sector (Grenada National Strategy Team, n.d.).

Agriculture sector is the key in addressing the high poverty levels in Grenada. In recognition
to its importance, their government is developing agricultural policies that can be crucial to its
economic growth and poverty alleviation. However, the underlying issues and constraints on
agriculture sector should be attended to if the government intends to increase its function. Since
agriculture production takes place in areas where there is high poverty incidence, a growth
originating from the sector will have a huge effect on the people and on reduction of poverty.
References:

About Grenada . (n.d.). Retrieved May 15, 2017, from United Nations Development Programme:
http://www.bb.undp.org/content/barbados/en/home/countryinfo/grenada.html
Cervantes-Godoy, D. and J. Dewbre (2010), “Economic Importance of Agriculture for Poverty
Reduction”, OECD Food, Agriculture and Fisheries Working Papers, No. 23, OECD
Publishing. doi: 10.1787/5kmmv9s20944-en
Development, I. F. (2007). Rural Poverty in Grenada . Retrieved May 16 , 2017, from Rural
Poverty Portal : http://www.ruralpovertyportal.org/country/home/tags/grenada
Fidler, A. (2016, October 13). Looking at the Problem of Rural Poverty in Grenada. Retrieved
May 16, 2017, from The Borgen Project: https://borgenproject.org/rural-poverty-in-
grenada/
Grenada- Rural Population. (n.d.). Retrieved May 15, 2017, from Trading Economics:
http://www.tradingeconomics.com/grenada/rural-population-percent-of-total-population-
wb-data.html
Leipzig. (1996). Country Report to the FAO International Technical Conference on Plant
Genetic Resources. Mt. Wheldale, St. George : Ministry of Agriculture, Forestry, and
Fisheries.
Mark, T. (2011, January 29 ). Rural poverty in Grenada. Retrieved May 16, 2017, from Theresa
Mark : http://theresamark.blogspot.com/2011/01/poverty-in-grenada.html
Sadoulet, A. d. (2009, May). Agricultural growth and poverty reduction: Additional evidence.
Retrieved May 16 , 2017, from Berkeley Department of Agriculture and Resoruce
Economics: http://are.berkeley.edu/~esadoulet/papers/WBRO%20Growth-Poverty%205-
22.pdf
St. George's, G. (2015, June 25). Grenada’s Unemployment Plunges. Retrieved May 15, 2017,
from The Official Website of the Government of Grenada:
http://www.gov.gd/egov/news/2015/jun15/25_06_15/item_4/unemployment-
plunges.html
Team, G. N. (n.d.). Growing Out of Poverty: A Strategic Direction in the Agriculture Sector-
Grenada's Case. Retrieved May 16, 2017, from International Trade Centre:
www.intracen.org/WorkArea/DownloadAsset.aspx?id=51803

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