WHAT IS THE AGRO-EXPORT ECONOMY? - CULTURE VOCABULARY - 2025

The agro-export economy is an economic model based on the export of raw materials derived from agricultural products. The concept began to take shape in the second half of the 19th century, mainly in Australia and some central Latin American countries. Its etymological origin is in the words agro and export.

The first term defines the set of techniques, activities and processes to cultivate or till the land and obtain its raw materials, while the second term refers to the marketing of these goods to foreign countries.

This model had a great boom in Latin America around 1850, when the main agrarian powers became the world's granary, providing raw materials to the main powers of the planet.

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Operation of the agro-export economy

The agro-export economy is based on the great variety of products that make up the agricultural or rural sector.

This sector includes grains, forages, all kinds of fruit from the orchard, fruit trees, wood and those derived from the agricultural industry, such as meat, dairy products, oils, preserves and juices.

Producing nations receive, in exchange for their commodities or raw goods (the raw materials listed above), manufactured industrial products and capital, to complete their local economy.

Commodities can be defined as all goods that can be mass produced by man, of which there are enormous quantities available in nature.

These may have a very high value and utility, but their specialization or level of development, on the contrary, is very low, which marks the internal industrial development.

In short, countries with an agro-export economy sell these goods or commodities to foreign countries, which then produce more complex products and sell them again at a higher price.

A mixed capital model

In an agro-export economy, the capital model could be defined as mixed, since it requires the active participation of the State and foreign investors to reach its highest degree of development and specialization.

The role of the state

The national State must generate and guarantee stable conditions for production, such as: planning means of transport and communication, establishing legal norms that regulate the sector, promoting trade and developing strategies to attract immigrant workers and investors.

Another central factor of local governments is taxes, through which the balance of trade can be equalized so as not to harm producers or workers.

Foreign investments

Foreign capital participates in the model through investment, the creation of advantageous financial situations for both parties, the development of optimal infrastructure for the production and import of raw materials.

Investments can occur in two ways:

• Direct form: the companies carry out their activity in the producing countries, with the establishment of local branches.
• Indirect form: through loans, which force nations to risky debt.

Benefits and harms of an agro-export economy

This type of economic model guarantees the producing countries a fluid commercial exchange, a development of local and regional activities and the insertion in the global economy with an active role.

However, it brings some disadvantages that can affect the industrial and economic development, and therefore, the social circumstances of the nations that export raw materials.

The scant industrial progress that this situation generates in the producing countries often translates into high rates of poverty and inequality, due to the lack of qualified jobs.

In addition, dependence on internal economic conditions is a constant alarm for producing countries, since their model is based on foreign capital.

On the other hand, the price of raw materials is always lower than that of manufactured products, so their trade balance can generate high levels of deficit.

The agro-export economy as an open model

Agro-exporting nations are by definition open, due to the openness that their local economies need to be able to sustain themselves in the international market.

In addition to discouraging the development of manufacturing and industrial activity, this causes situations of inequality in the levels of exchange if there are no strict and lasting regulations from those responsible for the state.

This situation of financial vulnerability affects less wealthy regional producers to a greater extent and favors large capitals.

Crops: basis of the agro-export model

Crop policy can be a great contribution to sustaining the agro-export model. Diversification, nourishment of niche sectors, and turnover can pay big dividends.

Those countries that manage to possess a rich range of commodities enjoy a constant flow of trade, without being altered by climatic factors or by the development phase of the crops.

Here too, the role of the State is of vital importance, through the establishment of favorable productive policies for each sector and zone, and the containment before the climatic effects that may affect production.

In contrast, when you go for a monoculture strategy, you can get great returns but the long-term costs are dangerous.

The destruction of soils, the accumulation of capital in few producers and the interruption of exports can be a deadly weapon for this type of agro-export model.

Although at present there are still countries that base their economy on an agro-export model, it is not an exclusive form of exchange but these countries also have their own industrial development of goods and services.

References

1. Argentine economic history in the 19th century, Eduardo José Míguez, Siglo XXI publishing house, Buenos Aires.
2. Economic, political and social history of Argentina, Mario Rapoport, Emece, 2007, Buenos Aires.
3. The Refugees of the Agroexport Model - Impacts of soy monoculture in Paraguayan campesino communities, Tomás Palau, Daniel Cabello, An Maeyens, Javiera Rulli & Diego Segovia, BASE Investigaciones Sociales, Paraguay.
4. Perspectives on the Agro-Export Economy in Central America, Pelupessy, Wim, University of Pittsburgh Press, United States, 1991.