Development priorities: the relative benefits of agricultural growth

Fabio Monteforte, Mathan Satchi and Jonathan Temple

Oxford Economic Papers, 2021, vol. 73, issue 3, 1122-1152

Abstract: Should agriculture or non-agriculture be a priority for development? We revisit this question using a two-sector, three-factor dynamic model with an asymptotic balanced growth path. The model allows a forward-looking assessment of development priorities based on lifetime welfare. A comparison of sector-specific productivity gains indicates that gains in non-agriculture are often more valuable, even when agriculture is initially the largest sector in terms of employment. We discuss the robustness of this result and how international capital mobility, capital intensity, demographics, the discount rate, and taxes on profits influence investment and structural transformation.

JEL-codes: F34 F43 O40 (search for similar items in EconPapers)
Date: 2021
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Working Paper: Development Priorities: The Relative Benefits of Agricultural Growth (2019)
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