Publication Type

Working Paper

Version

publishedVersion

Publication Date

9-2005

Abstract

The purpose of this paper is to develop a simple model of an economy in which growth is driven by a combination of exogenous technical change in agriculture as well as by a rising world demand for labor-intensive manufactured exports. We explore the relative roles of agricultural innovation and rising export demand in a model with two traded industrial goods and a non-traded agricultural good, food. When the non-traded sector uses a specific factor, we show that technical change in agriculture may be the key to sustained factor accumulation in industry, in particular driving intersectoral labor migration. A key assumption is a less than unitary price elasticity of demand for food. Our results could form a crucial link in capturing the story of labor-abundant economies which experienced structural transformation and growth through labor-intensive manufactured exports, without prior technology breakthroughs in industry. They contribute to explaining the massive growth in factor accumulation which shows up in some growth accounting studies : they may also imply that some of the contribution of technical progress is mistakenly attributed solely to factor accumulation.

Keywords

Structural change, agricultural productivity, labor migration, terms of trade

Discipline

Agricultural and Resource Economics | Economics

Research Areas

Applied Microeconomics

First Page

1

Last Page

19

Publisher

SMU Economics and Statistics Working Paper Series, No. 20-2005

City or Country

Singapore

Copyright Owner and License

Authors

Comments

Published in Journal of International Trade and Economic Development, 2006, https://doi.org/10.1080/09638190600690986

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