Working the land: a different look at productivity

Tom Traill - 09 November 2017

If a loose definition of the central economic objective is to make the most of what you have, then economically useful land should have a higher profile in the assessment of national productivity. Economically useful land is a tricky concept, but we have a proxy for it in cultivated land. According to the CIA handbook, less than 12 per cent of the earth’s land mass is cultivated. The national proportions vary enormously, from Iceland (0.1 per cent) to Bangladesh (65.5 per cent).

The basic premise is that land which is flat enough for cultivation should also be suitable for commercial, industrial or residential use. How well is land used in different parts of the world? What would an international comparison look like based on land area? In this exercise, we disallow the countries that derive a dominant proportion of their GDP from natural resources such as oil, gas and minerals.

Looking at nominal GDP generated per km2, small, densely populated nations with proportionately large financial sectors dominate. By one measure, the 1.9 km2 of Monaco generates 9 times as much GDP/km2 as the second-best performer, Singapore. At the other end of the scale the Central African Republic only generates US$3,000 per km2. Most of the lowest ranked nations are Saharan Africa. There is also, unsurprisingly, a correlation with the ranking of the economic freedom of countries.

India has the largest amount of cultivated land in the world, and the seventh highest proportion of cultivated land. India also has the highest amount of arable land (5th as a proportion, with Bangladesh first) and a high proportion of permanent crops. However, looking at GDP/capita per km2 of cultivated land, India comes out worst in the world. China scores little better.

Irrespective of the pace of industrialisation that India and China achieve, both have immense scope for productivity improvement. As they gain agricultural efficiency they can potentially improve their GDP/capita, either by having healthier, more productive, workers, or by transforming the use of poor agricultural land into more economically productive land.

wealthy countries, low proportions of cultivated land have not proved an obstacle to success. Singapore, Hong Kong and Switzerland are the prime examples. Strikingly, US, France and China have similar achievements by this measure. Reaching further down the scale, Canada’s scope for economic development is vast.

Figure 1

Data source: IMF and CIA factbook

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