On Why Agriculture Declines with Economic Growth

Kym Anderson

Agricultural Economics, 1987, vol. 1, issue 3, 195-207

Abstract: When economic growth is characterised by a slow rise in the demand for food and rapid growth in farm relative to non‐farm productivity, it is understandable that agriculture in a closed economy declines in relative terms as that economy develops. But why should agriculture decline in virtually all open growing economies as well, including those able to retain a comparative advantage in agricultural products? A key part of the answer is that the demand for non‐tradable goods tends to be income elastic, so resources are diverted to their production even in open economies.

Date: 1987
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