Bangladesh and New Zealand are two small countries. Agriculture is the economic base in
both countries. Both undertook economic reforms in the 1980s and 1990s. The experiences
with economic reforms in these two countries were mixed. Though the impact of reform on
macro-economic performance was positive, it was negative on agricultural growth. In both
countries, the fiscal balance improved, the current account deficit fell, overseas borrowing was
reduced, the foreign exchange reserve increased and inflation rates declined after macroeconomic
policy reforms. However, as agricultural reform was initiated and subsidies
removed, total production immediately fell and its growth rate experienced a long-term
decline. The decline in growth of agriculture was accompanied by a decline in this sector's
share to GDP and total export earnings. Nevertheless, the most recent growth rates in
agriculture show a healthy recovery and the level of financial profitability per farm/per unit of
land seems to have improved.· Farmers tended to diversify their farm business, follow intensive
practices and become more efficient in farming as a result of economic reforms. However, a
radical economic reform may initially be associated with reduced food supply due to a decline
in growth of agricultural production. This may have a short term benefit to a food exporting
country, but may worsen the food security of a food importing country. Thus a radical and
rapid policy reform in agriculture seems inappropriate for food deficit countries. The study
indicates further that the need for intervention in the market is less for progress of the
developed countries. Nevertheless, a balance between market liberalism and state activism is
required for overall development of the developing countries