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Agricultural Development vs. Industrialization: Effects of Trade

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  • Cristina Echevarria

Abstract

The question addressed in this paper is how trade affects the composition of the national product, thus having an effect on the overall growth rate of the economy. The paper uses a dynamic general equilibrium model with three different consumption goods: agriculture, manufactures, and services (nontradable). The main finding is that if the country produces only primaries and services, the effects of trade on growth are mixed. Trade helps growth at low levels of income but at higher levels trade slows the country's growth. If the country produces manufactures and services, the effect of trade on growth is not substantial.

Suggested Citation

  • Cristina Echevarria, 1995. "Agricultural Development vs. Industrialization: Effects of Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 28(3), pages 631-647, August.
    • Handle: RePEc:cje:issued:v:28:y:1995:i:3:p:631-47
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    Citations

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    Cited by:

    1. Vinyes, Cristina & Roe, Terry, 2012. "Growth of the Brazilian biofuel sector: an inter-temporal general equilibrium analysis," Conference papers 332230, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Uy, Timothy & Yi, Kei-Mu & Zhang, Jing, 2013. "Structural change in an open economy," Journal of Monetary Economics, Elsevier, vol. 60(6), pages 667-682.
    3. Unjung Whang, 2017. "Structural Transformation and Comparative Advantage: Implications for Small Open Economies," The World Economy, Wiley Blackwell, vol. 40(4), pages 743-763, April.
    4. 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.
    5. Stijepic, Denis & Wagner, Helmut, 2008. "Impacts of Intermediate Trade on Structural Change," MPRA Paper 40841, University Library of Munich, Germany, revised 23 Aug 2012.
    6. Douglas Gollin & Stephen L. Parente & Richard Rogerson, 2004. "Farm Work, Home Work, and International Productivity Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(4), pages 827-850, October.
    7. Xavier Irz & Terry L. Roe, 1997. "Agriculture and economic growth in a market economy : analysis of the French postwar experience," Post-Print hal-02285607, HAL.
    8. Ricardo Reyes-Heroles, 2018. "Globalization and Structural Change in the United States: A Quantitative Assessment," 2018 Meeting Papers 1027, Society for Economic Dynamics.
    9. Ruttan, Vernon W., 1998. "Growth Economics And Development Economics: What Should Development Economists Learn (If Anything) From The New Growth Theory?," Bulletins 12972, University of Minnesota, Economic Development Center.
    10. Timothy J. Kehoe & Kim J. Ruhl & Joseph B. Steinberg, 2018. "Global Imbalances and Structural Change in the United States," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 761-796.
    11. E. Cristina Echevarria, 2008. "International trade and the sectoral composition of production," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 192-206, January.
    12. Pina, Gilson M. G., 2013. "Mudança estrutural e a relação entre os setores em Cabo Verde [Structural change and the sectoral linkage in Cape Verde]," MPRA Paper 46015, University Library of Munich, Germany.
    13. Arnaud Daymard, 2020. "Agricultural Productivity as a Prerequisite of Industrialization: Some New Evidence on Trade Openness and Premature Deindustrialization," THEMA Working Papers 2020-07, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    14. Fei, Xuan, 2022. "Trade liberalization and structural changes: Prefecture-level evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 103-126.
    15. de Cordoba, Gonzalo Fernandez & Kehoe, Timothy J., 2000. "Capital flows and real exchange rate fluctuations following Spain's entry into the European Community," Journal of International Economics, Elsevier, vol. 51(1), pages 49-78, June.

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