Abstract:
This paper analyses the effects of agricultural productivity gains on the industrialization process and on the long run growth rate of the economy. The model used for analysis allows endogenous gains in agricultural productivity via learning-by- doing and, besides that, it is assumed that accumulated experience in the manufacture sector exerts a positive impact on agricultural productivity. With this apparatus it is shown that a necessary condition to the decline of industrial employment is due to comparative advantage in agriculture, and that the rest of the world's economy has a poor industry/agriculture integration. Following Redding (1999) it is also shown that interventionist trategic policies can reverse specialization induced by starting comparative advantages and to increase welfare gains.
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