The Green Revolution, Structural Transformation, and Economic Development via Market Mechanisms

Takuma Kunieda (), Keisuke Okada (), Yasuyuki Sawada () and Akihisa Shibata ()
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Takuma Kunieda: Kwansei Gakuin University
Keisuke Okada: Kansai University
Yasuyuki Sawada: The University of Tokyo
Akihisa Shibata: Osaka University of Economics

No 1131, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: Building on Matsuyama’s (1992) model, we examine how the Green Revolution contributed to structural transformation through relative-price adjustments. Using shift-share instruments based on Gollin et al. (2021) and Huang (2024), together with a novel projected-TFP instrument, we address the endogeneity of relative agricultural prices. We find that agricultural productivity gains lower relative prices and facilitate structural transformation when markets function effectively. Institutional quality critically shapes this mechanism: weak institutions distort price transmission and impede structural transformation. We further construct a price-based misallocation index capturing these distortions. Our findings highlight the importance of institutions in realizing the benefits of agricultural innovation.

Keywords: Asset bubbles; Structural transformation; Green Revolution; Misallocation; Economic development; Price-based misallocation (PBM) index (search for similar items in EconPapers)
JEL-codes: O11 O13 O43 Q16 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2026-10
New Economics Papers: this item is included in nep-agr
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