As the country entered the 1970s, the rapid growth of population
was beginning to exert growing pressure on available resources, to
strain traditional economic and social institutions, and to pose fresh
challenges for the management of the national economy. A poor
country with per capita income variously estimated at the equivalent
of US$95 to US$120, the Malagasy Republic had hitherto been
basically self-sufficient in staple foodstuffs. It had also produced a
variety of tropical export crops and small quantities of two or three
minerals in some demand on world markets, and had been able to
finance its import requirements of manufactures, fuels, and matériel
with the help of a large amount of foreign grant aid but without
incurring burdensome foreign or domestic indebtedness.

The economy was essentially agricultural, and most of the
population was dependent on cultivation except in a few cattle-
herding districts of the south and middle west. About 80 percent of
the cultivators were engaged primarily in subsistence cultivation of
rice, although there were very few who did not sell some portion of
their crop. The Malagasy rural population had taken over most of the
production of export crops introduced by French planters, and
foreign-owned plantations now occupied only a small fraction of the
arable land under crops. There were no serious tenure problems,
although the average Malagasy holding was uneconomically small,
and mounting population pressure in some districts had given rise to
fragmentation and soil depletion.

Although disadvantaged by irregular rainfall, recurrent
destructive cyclones, a severe problem of erosion, and poor soils over
much of its land area, the country had enough arable land,
pastureland, and irrigation potential to permit a considerable ex-
pansion of agricultural production through resettlement projects in
the western river basins and the north. It had a valuable advantage
in the regional diversity of its climate and of its pockets of arable soil.
In comparison to many developing countries, it had a relatively high
rate of literacy, and the population possessed a high level of artisan
skills and had shown alacrity in learning (see ch. 7).

A small but growing industrial sector, engaged chiefly in the
processing of domestic agricultural products, was beginning to
replace a portion of imports of manufactures. There was a mixed
economy in which private enterprise and foreign private investment
were encouraged. The privately owned portion of large-and

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