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Fertilizing growth: Agricultural inputs and their effects in economic development

John McArthur and Gordon C. McCord

Journal of Development Economics, 2017, vol. 127, issue C, 133-152

Abstract: This paper estimates the role of agronomic inputs in cereal yield improvements and the consequences for countries' processes of structural change. The results suggest a clear role for fertilizer, modern seeds and water in boosting yields. We then test for respective empirical links between agricultural yields and economic growth, labor share in agriculture and non-agricultural value added per worker. The identification strategy includes a novel instrumental variable that exploits the unique economic geography of fertilizer production and transport costs to countries' agricultural heartlands. We estimate that a half ton increase in staple yields generates a 14 to 19 percent higher GDP per capita and a 4.6 to 5.6 percentage point lower labor share in agriculture five years later. The results suggest a strong role for agricultural productivity as a driver of structural change.

Keywords: Agriculture; Fertilizer; Structural change; Growth; Green revolution (search for similar items in EconPapers)
JEL-codes: O10 O13 O47 Q10 (search for similar items in EconPapers)
Date: 2017
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