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Global Economic Growth and Agricultural Land Conversion under Uncertain Productivity Improvements in Agriculture

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  • Bruno Lanz
  • Simon Dietz
  • Tim Swanson

Abstract

We study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level. We use a two-sector Schumpeterian model of growth, in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population. Agriculture demands land as an input, itself treated as a scarce form of capital. In our model both population and sectoral technological progress are endogenously determined, and key technological parameters of the model are structurally estimated using 1960-2010 data on world GDP, population, cropland and technological progress. Introducing random shocks to the evolution of total factor productivity in agriculture, we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages, and that it significantly affects both optimal consumption and population trajectories.

Suggested Citation

  • Bruno Lanz & Simon Dietz & Tim Swanson, 2018. "Global Economic Growth and Agricultural Land Conversion under Uncertain Productivity Improvements in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(2), pages 545-569.
  • Handle: RePEc:oup:ajagec:v:100:y:2018:i:2:p:545-569.
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    Cited by:

    1. repec:eee:eecrev:v:108:y:2018:i:c:p:1-19 is not listed on IDEAS
    2. repec:gam:jsusta:v:10:y:2018:i:12:p:4465-:d:186090 is not listed on IDEAS
    3. repec:eee:ecolec:v:144:y:2018:i:c:p:260-277 is not listed on IDEAS
    4. Lanz, Bruno & Dietz, Simon & Swanson, Tim, 2018. "The Expansion of Modern Agriculture and Global Biodiversity Decline: An Integrated Assessment," Ecological Economics, Elsevier, vol. 144(C), pages 260-277.

    More about this item

    Keywords

    agricultural productivity; economic growth; endogenous innovations; environmental constraints; food security; global population; land conversion; stochastic control;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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