Agricultural Distortions, Structural Change, and Economics Growth: A Cross-Country Analysis

Benjamin N. Dennis () and Talan B. Işcan ()
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Talan B. Işcan: Department of Economics, Dalhousie University

Working Papers from Dalhousie University, Department of Economics

Abstract: Taxing agriculture to mobilize resources for industrialization has been a widely used development strategy. Using a novel cross-country time-series data set with direct measures of agricultural taxation, we examine how a policy bias against agriculture affects the speed of convergence in income per capita, structural change, and economic growth. We find that distortionary agricultural policies in poor economies account for the emergence of convergence clubs in our sample by significantly retarding their structural transformation and economic growth. We also identify two key channels, the subsistence consumption effect and the relative productivity effect, that account for the relatively slow structural change in poor economies with high agricultural taxes.

Keywords: taxing agriculture; structural change; convergence clubs; economic growth (search for similar items in EconPapers)
Pages: 50 pages
Date: 2007-03-08
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Published in American Journal of Agricultural Economics, 2011, pages 881-902

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