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three major areas do not seem to be a function of differences
in output growth, but in the differences in demand changes
compared to changes in output. On a per capita basis, the
Southern Area has apparently had a much slower output growth
than the rest of the world.
The remarkable similarity in the growth of output in the
various areas of the world means that the underlying causes
of their quite different problems must be somewhere else. In
the case of the low income countries, the source of the problem
is not difficult to detect. If there is rapid economic growth,
the demand for farm products will increase at an annual rate
of 3.5 to 4%. This increase may be compared to an estimated
annual growth rate of output of about 1.5 to 3.0% for the
past quarter century and 2.7 to 3.49% for the past decade.
The nature of the problem in Eastern Europe is similar to
areas with rapidly growing demand for food, though there is
an important distinguishing element. In Eastern Europe the
growth in the demand for food will be substantially greater
‘han in Western Europe or the United States. While the growth
of population may be expected to be somewhat less than in
the United States, it will probably be much more rapid than in
Western Europe (!). The income elasticity of demand for
food in Eastern Europe — based on scanty information from
the Soviet Union — is relatively high; the income elasticity is
probably about 0.75 and almost certainly greater than o.s5.
Thus rising consumer incomes, perhaps at an annual per capita
rate of about 3%, combined with an annual population growth
rate of 1.4% would result in a growth of demand for food of
3 to 3.5% annually.
But the growth in demand is here estimated on the assump-
‘on that there now exists an equilibrium between the demand
(") U.S. Department of Agriculture, The World Food Budget, 1962 and
1966, Foreign Agricultural Economic Report No. 4, Revised, Tanuary 1062,
3. 7%
v| Johnson - pag. 19
