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The Missing Food Problem: Trade, Agriculture, and International Productivity Differences

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  • Trevor Tombe

Abstract

Agriculture in poor countries has low productivity, high employment, and negligible trade flows relative to other sectors. These facts motivate a multisector, open-economy view of international productivity differences. With a quantitative multicountry model featuring nonhomothetic preferences, multiple interrelated sectors, distorted labor markets, and costly trade, I find: trade amplifies the negative effect of labor market distortions; trade costs—large for poor countries, especially in agriculture—significantly contribute to international productivity differences; and explicitly modeling agriculture reveals additional channels through which poor countries may gain from trade. (JEL F41, J24, J43, O13, O19, Q11, Q17)

Suggested Citation

  • Trevor Tombe, 2015. "The Missing Food Problem: Trade, Agriculture, and International Productivity Differences," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(3), pages 226-258, July.
  • Handle: RePEc:aea:aejmac:v:7:y:2015:i:3:p:226-58
    Note: DOI: 10.1257/mac.20130108
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    References listed on IDEAS

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    1. 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.
    2. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
    3. Tasso Adamopoulos, 2011. "Transportation Costs, Agricultural Productivity, And Cross‐Country Income Differences," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 489-521, May.
    4. Fernando Parro, 2013. "Capital-Skill Complementarity and the Skill Premium in a Quantitative Model of Trade," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 72-117, April.
    5. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 1-44.
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    Citations

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    Cited by:

    1. Margarita Gafaro & Heitor S. Pellegrina, 2018. "Market access, agricultural productivity and selection into trade: evidence from Colombia," Borradores de Economia 1050, Banco de la Republica de Colombia.
    2. Eberhardt, Markus & Vollrath, Dietrich, 2016. "The Role of Crop Type in Cross-Country Income Differences," CEPR Discussion Papers 11248, C.E.P.R. Discussion Papers.
    3. Barker, Tom & Üngör, Murat, 2019. "Vietnam: The next asian Tiger?," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 96-118.
    4. Diego Restuccia & Richard Rogerson, 2017. "The Causes and Costs of Misallocation," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 151-174, Summer.
    5. Gregory Casey & Soheil Shayegh & Juan Moreno-Cruz & Martin Bunzl & Oded Galor & Ken Caldeira, 2019. "The Impact of Climate Change on Fertility," Working Papers 2019-2, Brown University, Department of Economics.
    6. Trevor Tombe & Xiaodong Zhu, 2019. "Trade, Migration, and Productivity: A Quantitative Analysis of China," American Economic Review, American Economic Association, vol. 109(5), pages 1843-1872, May.
    7. Thibault Fally & James Sayre, 2018. "Commodity Trade Matters," 2018 Meeting Papers 172, Society for Economic Dynamics.
    8. Tomasz Swiecki, 2017. "Determinants of Structural Change," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 95-131, March.
    9. Diego Restuccia & Tasso Adamopoulos, 2017. "Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data," 2017 Meeting Papers 1180, Society for Economic Dynamics.
    10. Wenbiao Cai, 2016. "Risk, Selection and Productivity Differences," Departmental Working Papers 2016-02, The University of Winnipeg, Department of Economics.
    11. Heerman, Kari E.R., 2020. "Technology, ecology and agricultural trade," Journal of International Economics, Elsevier, vol. 123(C).
    12. Heerman, Kari E. & Sheldon, Ian M., 2018. "Increased economic integration in the Asia-Pacific Region: What might be the potential impact on agricultural trade?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274279, Agricultural and Applied Economics Association.
    13. Luca Salvatici & Silvia Nenci, 2017. "New features, forgotten costs and counterfactual gains of the international trading system," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 44(4), pages 592-633.
    14. Chaoran Chen, 2017. "Untitled Land, Occupational Choice, and Agricultural Productivity," American Economic Journal: Macroeconomics, American Economic Association, vol. 9(4), pages 91-121, October.
    15. Jung, Yeonha, 2018. "The Legacy of King Cotton: Agricultural Patterns and the Quality of Structural Change," SocArXiv trjfz, Center for Open Science.
    16. Jonathan Eaton & Samuel Kortum & Brent Neiman & John Romalis, 2016. "Trade and the Global Recession," American Economic Review, American Economic Association, vol. 106(11), pages 3401-3438, November.
    17. Tongtong Hao & Ruiqi Sun & Trevor Tombe & Xiaodong Zhu, 2020. "The Effect of Migration Policy on Growth, Structural Change, and Regional Inequality in China," Working Papers tecipa-659, University of Toronto, Department of Economics.
    18. Zheng Li & Jorge Martinez-Vazquez, 2018. "Fiscal Decentralization and Interregional Capital Misallocation: Evidence from China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1816, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    19. Jung, Yeonha, 2020. "The long reach of cotton in the US South: Tenant farming, mechanization, and low-skill manufacturing," Journal of Development Economics, Elsevier, vol. 143(C).
    20. Bolhuis, Marijn, 2019. "Catch-Up Growth and Inter-Industry Productivity Spillovers," MPRA Paper 94730, University Library of Munich, Germany.
    21. Lee, Iona Hyojung, 2018. "Industrial output fluctuations in developing countries: General equilibrium consequences of agricultural productivity shocks," European Economic Review, Elsevier, vol. 102(C), pages 240-279.
    22. Hassan, Fadi, 2016. "The price of development: The Penn–Balassa–Samuelson effect revisited," Journal of International Economics, Elsevier, vol. 102(C), pages 291-309.
    23. Teignier, Marc, 2018. "The role of trade in structural transformation," Journal of Development Economics, Elsevier, vol. 130(C), pages 45-65.
    24. Davide Del Prete & Laura Forastiere & Valerio Leone Sciabolazza, 2020. "Causal Inference on Networks under Continuous Treatment Interference," Papers 2004.13459, arXiv.org.

    More about this item

    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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