Any discussion of development must start with a consideration of the state and prospects of agriculture. If this sector cannot be transformed, there can be no genuine revolution of economic growth. The World Bank's (2008) World Development Report highlights the importance of this sector for development. As the food crisis that erupted in early 2008 (labeled “a silent tsunami” by the United Nations’ World Food Programme) showed, the international community cannot neglect agriculture, for this crisis may bring obstacles to globalization (food markets are in turmoil, protests are growing, and trade and openness can be undermined).

Agriculture is still the largest employer in many developing countries in Asia, including Bangladesh, Cambodia, the People's Republic of China (PRC), India, Indonesia, Pakistan, Papua New Guinea, Thailand, and Viet Nam (in 2000–2004, agriculture was still the largest employer in developing Asia in 12 out of 23 countries for which data were available). And in many other countries in the region, although it is not the largest employer, it still employs a very significant share of the labor force.

Figure 5.1 shows the generalized tendency for agricultural output and employment shares to decline as countries become richer. This is also the case across much of developing Asia. Especially significant have been the declines in output that occurred in the PRC and India: in the former from about 32% in the 1970s to about 13% in 2000–2004, and in India from about 42% to about 23% during the same period. The share of employment in agriculture has also declined across most of developing Asia, except in Central and West Asia. This is the result of the convulsion that this region underwent after the collapse of the Soviet Union. Figure 5.1 also indicates that, in general, the decline in agricultural employment has occurred at a much slower pace than that in output. Tables A5.1 and A5.2 at the end of the chapter provide total and sector growth rates and output and employment shares.

As stated above, the objective of development has to be the increase in productive capacity; but this occurs during the structural transformation of the economy, that is, the shift of resources (e.g., labor) from activities with low productivity, traditionally agriculture, into activities with high productivity, such as industry and services (Asian Development Bank 2007b; Felipe and Estrada 2008; Felipe et al. 2007).