Agrarian economy

Sociology

When the main economic activity of a country is centered around agriculture, and animal farming, we call that country’s economy as ‘agrarian economy’.

Generally, these countries lag behind in industries, and services. So, a large part of their GDP comes from agriculture.

Gradually, countries have shifted from agriculture to industries, thanks to the effects of globalization. India is a good example of such transformation.

The capacity of an agrarian economy to generate wealth and employment is limited. So, countries tend to move towards industrialization.

Cuba is a good example of a country that still has an agrarian economy. Cubans grow tobacco, sugarcane etc. which they export to earn foreign exchange. Tourism is also a source of foreign exchange for the Cubans. One of the main reasons of the present economic hardship of Sri Lanka is the lack of a sound industrial base. Compare Sri Lanka with Taiwan to understand the value-adding capacity of an industrial economy.

Agrarian economies are generally dependant on climatic conditions. So, they fall prey to floods and droughts too often.