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The role of trade in structural transformation

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  • Teignier, Marc

Abstract

Low agriculture productivity is considered a key obstacle to economic development for many countries. International trade in agricultural goods can help overcome this barrier and facilitate structural transformation because it allows countries to import part of their food needs. This article quantifies the role of trade in this context through the examples of South Korea during the last 50 years and Great Britain in the 19th century. To do the analysis, I calibrate and simulate a two-sector, neoclassical growth model to match the data and perform the policy experiments. I find that agricultural imports played a crucial role in the early transformation of Great Britain, while, in South Korea, trade also had a positive impact on its structural transformation but it could have played a much larger role if the country had not introduced agricultural protection policies.

Suggested Citation

  • Teignier, Marc, 2018. "The role of trade in structural transformation," Journal of Development Economics, Elsevier, vol. 130(C), pages 45-65.
  • Handle: RePEc:eee:deveco:v:130:y:2018:i:c:p:45-65
    DOI: 10.1016/j.jdeveco.2017.09.002
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    More about this item

    Keywords

    Sectoral reallocation; Agricultural productivity; Comparative advantage; Agricultural trade policy;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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