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Agricultural Labour Productivity and the Intensity of Agri-food Trade in Selected Regional Trade Agreements

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  • Nawrocka, Agnieszka Baer
  • Sapa, Agnieszka
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    Abstract

    A characteristic feature of contemporary world economy is the development of regional trade groupings in quantitative and qualitative aspects. The groupings have been formed for many years, but the intensification of this process has been particularly evident since the mid-90’s of previous century. One of the reason for formation of such groups is improving economic efficiency and welfare in the integrating countries. Regional trading blocs and the liberalization of trade flows among members may result in the intensification of intra-regional trade and the process of convergence, which can also reveals in relation to agricultural productivity increase. This in turn affects the growth of farmers' income and improve the international competitiveness of agriculture, which is especially important for the developing countries. The main aim of this paper is to answer the question whether within regional trade groupings convergence of agricultural productivity occurs, and whether this process is accompanied by increase in the intensity of intra-regional agri-food trade. In addition, authors try to find if the obtained results are related to the level of development of the member countries of the selected regional trading blocs. Topic of this paper comprise part of regional development economics, which is based on classical economics and is related to the international trade theory with the convergence concept (J. Tinbergen). According to this concept, formulated in the 40’s of the twentieth century, a result of free trade between developed and developing countries will level out economic wealth. To achieve such a state, active participation in the global economy and appropriate capital per worker in the developing countries is needed. Trade liberalization within a regional trading groups may be reflected into an increase in the productivity of production factors, including agriculture, although the empirical studies carried out do not give conclusive results. The analyzed groups are represented by North-North relations (EFTA), North – South relations (NAFTA) and South - South relations (MERCOSUR, EAC, CAN and CACM). Agricultural productivity will be measured by labor productivity in agriculture, although it doesn’t quite reflect the productivity of agriculture, but it is very important in the process of food production and the creation of agricultural income. For each regional trade agreement the coefficient σ convergence has been calculated and the convergence process has been evaluated. In order to verify σ convergence, the standard deviation of the log of agriculture value added per worker has been used. The analysis is based on data derived from World Development Indicators database and covers the period 1980-2010. Changes in the agri-food flows are measured by some indices: shares of intra-regional trade, intra-regional trade intensity index and symmetrical introversion trade indicator. Agri-food products are adopted in accordance with the SITC classification. Trade data come from the World Integrated Trade Solution database. On the basis of the conducted analyses it cannot be clearly stated that membership in regional trade agreement means the existence of the processes of convergence of agricultural labour productivity among countries constituting a particular grouping. What is more, in the analysed groupings it is difficult to indicate unambiguous similarities within agri-food trade, that accompany the identified convergence/divergence process or the development level of the member countries.

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    Bibliographic Info

    Paper provided by International Agricultural Trade Research Consortium in its series Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain with number 152381.

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    Date of creation: Jun 2013
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    Handle: RePEc:ags:iatr13:152381

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    Keywords: Agricultural and Food Policy; Food Consumption/Nutrition/Food Safety; International Relations/Trade; Productivity Analysis;

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    1. Sala-i-Martin, Xavier, 1994. "Regional Cohesion: Evidence and Theories of Regional Growth and Convergence," CEPR Discussion Papers 1075, C.E.P.R. Discussion Papers.
    2. Jane Korinek & Mark Melatos, 2009. "Trade Impacts of Selected Regional Trade Agreements in Agriculture," OECD Trade Policy Papers 87, OECD Publishing.
    3. Derek Headey & Mohammad Alauddin & D.S. Prasada Rao, 2010. "Explaining agricultural productivity growth: an international perspective," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 1-14, 01.
    4. Cheong, David, 2010. "Methods for Ex Ante Economic Evaluation of Free Trade Agreements," Working Papers on Regional Economic Integration 52, Asian Development Bank.
    5. Fernando B. Soares & Roberto Ronco, 2000. "Agricultural productivity in the European Union convergence or divergence among members?," ICER Working Papers 20-2000, ICER - International Centre for Economic Research.
    6. Yucan Liu & C. Richard Shumway & Robert Rosenman & V. Eldon Ball, 2008. "Productivity Growth and Convergence in U.S. Agriculture: New Cointegration Panel Data Results," Working Papers 2008-4, School of Economic Sciences, Washington State University.
    7. Roberto Esposti, 2011. "Convergence and divergence in regional agricultural productivity growth: evidence from Italian regions, 1951–2002," Agricultural Economics, International Association of Agricultural Economists, vol. 42(2), pages 153-169, 03.
    8. Alexiadis, Stilianos, 2010. "Convergence in Agriculture: Evidence from the European Regions," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 11(2), June.
    9. Alexiadis, Stilianos & Kokkidis, Stilianos, 2010. "Convergence in Agriculture: Evidence from the regions of an Enlarged EU," MPRA Paper 26011, University Library of Munich, Germany.
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