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The Quest for Productivity Growth in Agriculture and Manufacturing

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  • María Dolores Guilló
  • Fidel Pérez Sebastián

Abstract

We develop a theory to explain the transition from stagnation to modern growth. We focus on the forces that shaped the evolution of total factor productivity in agriculture and manufacturing across history. More specifically, we build a multisector model of endogenous technical-change and economic growth. We consider an expanding-variety setup with rising labor specialization and two different R&D technologies, one for agriculture and another for manufacturing. As a consequence, total factor productivity in the model can increase via two different channels. First, population growth allows larger levels of specialization of land and labor in the economy that bring efficiency gains. This type of productivity improvement is capital saving, but can not generate sustained growth. Technical change is also possible by investing in R&D. Unlike specialization, new technologies generated in this way are land and labor augmenting, and are the key to modern growth. In the model, the economy has not incentives to invest in R&D until a minimum knowledge base is available to researchers. This is in line with ideas contained in Mokyr (2005). To make possible the accumulation of this minimum knowledge base, we assume that learning-by-doing is the implicit underlying force that leads to specialization. However, land and labor specialization is based on knowledge whose nature differs in agriculture and in manufacturing. More specifically, whereas this knowledge is farm-specific in agriculture, mainly concern with the acquisition of uncodified information about local conditions of soil and whether, specialization in manufacturing is the result of general knowledge, mainly codified, that contributes at a larger extent to the knowledge base.

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File URL: http://www.degit.ifw-kiel.de/papers/degit_11/C011_005.pdf
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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c011_005.

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Length: 15 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:deg:conpap:c011_005

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Related research

Keywords: stagnation; modern growth; specialization; learning-by-doing; R&D; Knowledge base;

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References

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  1. Oded Galor, 2004. "From Stagnation to Growth: Unified Growth Theory," GE, Growth, Math methods 0409003, EconWPA.
  2. Stephen L. Parente & Edward C. Prescott, 2004. "A unified theory of the evolution of international income levels," Staff Report 333, Federal Reserve Bank of Minneapolis.
  3. Daron Acemoglu, 2002. "Directed Technical Change," Review of Economic Studies, Oxford University Press, vol. 69(4), pages 781-809.
  4. Bernard, A.B. & Jones, C.I., 1993. "Productivity Across Industries and Countries: Time Series Theory and Evidence," Working papers 93-17, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Mokyr, Joel, 2005. "Long-Term Economic Growth and the History of Technology," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 17, pages 1113-1180 Elsevier.
  6. Restuccia, Diego & Yang, Dennis Tao & Zhu, Xiaodong, 2008. "Agriculture and aggregate productivity: A quantitative cross-country analysis," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 234-250, March.
  7. Charles I. Jones & John C. Williams, 1997. "Measuring the social return to R&D," Finance and Economics Discussion Series 1997-12, Board of Governors of the Federal Reserve System (U.S.).
  8. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," Center for Development Economics 2002-09, Department of Economics, Williams College.
  9. Daron Acemoglu, 2003. "Labor- And Capital-Augmenting Technical Change," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 1-37, 03.
  10. Gollin, Douglas & Parente, Stephen L. & Rogerson, Richard, 2007. "The food problem and the evolution of international income levels," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1230-1255, May.
  11. Marla Ripoll & Juan Carlos Cordoba, 2006. "Agriculture and Aggregation," Working Papers 371, University of Pittsburgh, Department of Economics, revised Nov 2008.
  12. Galor, Oded & Mountford, Andrew, 2002. "Why are a Third of People Indian and Chinese? Trade, Industrialization and Demographic Transition," CEPR Discussion Papers 3136, C.E.P.R. Discussion Papers.
  13. Marvin Goodfriend & John McDermott, 1994. "Early development," Working Paper 94-02, Federal Reserve Bank of Richmond.
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