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Philipp Fink, Agricultural Export Dependency in:

Philipp Fink

Late Development in Hungary and Ireland, page 46 - 47

From Rags to Riches?

1. Edition 2009, ISBN print: 978-3-8329-4173-4, ISBN online: 978-3-8452-1720-8 https://doi.org/10.5771/9783845217208

Series: Nomos Universitätsschriften - Politik, vol. 168

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46 Ireland in this respect is Denmark, which had a similar distribution of landholdings and dependent on British export markets during the 19th Century (Mjøset 1992: 214- 215). Nevertheless, Danish farmers were more diversified, specialising in labourintensive dairy cattle and pork. Additionally, Danish farms were more differentiated producing also cereals as well as fodder production. Cereals and fodder were mainly imported into Ireland from Britain. Forward and backward linkages in Danish agriculture allowed the specialisation in later industrial export niches (Katzenstein 1985: 166). A further striking difference was the introduction of cooperatives in Denmark and their strong acceptance by farmers. The cooperatives allowed the development of scale economies and their exploitation, thus increasing agricultural productivity (Mjøset 1992: 242-244). These cooperatives not only established important links between agricultural producers and producers of relevant services and goods. They also played a pivotal role in human and physical capital investment not only in the agricultural sector, but also supporting the later industrialisation of the country. Hence, as productivity gains and capital accumulation increased displacing labour, excess labour found demand in the sectors servicing agriculture (Katzenstein 1985: 167, 169). In Ireland, no such comparable organisation was developed until the 20th Century and these were only active in processing and marketing areas. Thus capital accumulation in Irish agriculture led to emigration, as the industrial and service sectors were too underdeveloped to take on displaced farming labour (Barry 1999b: 28). As Crotty (1986: 44) chillingly remarks, “people were replaced by more profitable livestock”. 1.3 Agricultural Export Dependency In summing up the modernisation blockages for both Ireland and Hungary, the development of both countries to agricultural suppliers explains the lack of indigenous industrial capacities. Backwardness in the form of a lack of technological and industrial capacity was the result of the culmination of both external and internal constraints resulting from the establishment of defective capitalism. In both cases, the external factors in form of imperial incorporation affirmed and guarantied the prevalence of the respective internal social and economic structures. Internal constraints, based on the unequal distribution of agricultural property rights, hindered the development of rural markets and demand for basic industrial and consumer goods. The high degree of land concentration resulted in a high level of income inequality. Consequently, the majority of the agricultural population was dependent on subsistence farming, thus crippling the development of rural markets due to low demand resulting from low incomes, as traditional consumption patterns prevailed. In both cases, imperial economic policies deepened the dependency on labourextensive agricultural exports in exchange for industrial imports. Externally-induced modernisation served to further increase this dependency. The nature of agricultural 47 production also prohibited the development of labour-intensive export niches. Accordingly, rising demand for agricultural exports did not prompt an expansion of production and investment in the remaining sectors of the economy. As a result, agricultural export specialisation displayed higher productivity than the other economic sectors. Increased agricultural investments led to increased unemployment and marginalisation. Owing to their lower productivity resulting from low internal demand and competition with superior imports, the remaining economic sectors were unable to absorb additional labour. Hence, both economies followed peripheral modes of growth, as they were dependent on the demand from the respective imperial core for their agricultural exports. 1.4 Socioeconomic Effects The described modernisation deficits had decisive effects on the socioeconomic structures for each country. Hungary’s and Ireland’s role as agricultural producers resulted in the predominance of agrarian interests in the political sphere and the weak development of political counter forces. The weak industrial base coupled with high levels of rural unemployment led to the evolution of not only a weak labour movement, but also to a small non-agricultural middleclass. 1.4.1 Hungary Beginning with the socioeconomic elites, the recentralisation of economic and political power, in form of re-feudalisation, resulted in the aristocracy to cement its powerbase vis-à-vis the other classes. Furthermore, they forged a state apparatus to meet their demands and to secure the continuation of their influence. Secondly, the evolution of the bourgeoisie was exceedingly hampered by ethnic and social divides and by the slow development of an industrial base, as market growth was constrained by low demand. Furthermore, uneven modernisation in the form of labour-extensive agricultural specialisation caused a distinct social divide with the subsequent marginalisation of a large proportion of the rural population. Finally, constrained industrialisation resulted in the evolution of a weak labour movement limited to the few industrial centres of the country. The subsequent weak development of counter classes allowed the aristocratic political elites to retain control over the economic and political power in the country.

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Zusammenfassung

Irland und Ungarn verfolgen eine Entwicklungsstrategie, die in bewusster Abhängigkeit von Globalisierungsprozessen in Form von ausländischen Direktinvestitionen steht und sich als Paradigma in der Peripherie durchgesetzt hat. Doch dieser Entwicklungspfad hat zu einer ungleichen und abhängigen Entwicklung geführt. Dies ist laut dem Autor das Resultat des mangelnden Gestaltungswillens beider Staaten, für einen gleichgewichtigen Wachstumsprozess zu sorgen. Die historische Analyse zeigt, dass eine auf ausländische Firmen fußende Entwicklungsstrategie nicht ausreicht, um traditionelle Peripheralität zu überwinden. Der Autor fordert eine Reform des Entwicklungsparadigmas, um eine gleichgewichtige Entwicklung zu ermöglichen.