Agricultural Productivity, Comparative Advantage and Economic Growth

Kiminori Matsuyama

No 3606, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The role of agricultural productivity in economic development is addressed in a two-sector model of endogenous growth in which a) preferences are non-homothetic and the income elasticity of demand for the agricultural good is less than unitary, and b) the engine of growth is learning-by-doing in the manufacturing sector. For the closed economy case, the model predicts a positive link between agricultural productivity and economic growth and thus provides a formalization of the conventional wisdom, which asserts that agricultural revolution is a precondition for industrial revolution. For the open economy case, however, the model predicts a negative link; that is, an economy with a relatively unproductive agricultural sector experiences faster and accelerating growth. The result suggests that the openness of an economy should be an important factor when planning development strategy and predicting growth performance.

Date: 1991-01
Note: EFG
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Citations: View citations in EconPapers (15)

Published as Journal of Economic Theory, December,1992.

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Related works:
Journal Article: Agricultural productivity, comparative advantage, and economic growth (1992)
Working Paper: Agricultural Productivity, Comparative Advantage, and Economic Growth (1990)
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