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Development priorities: the relative benefits of agricultural growth

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  • Fabio Monteforte
  • Mathan Satchi
  • Jonathan R. W. Temple

Abstract

Should agriculture or non-agriculture be a priority for development? We revisit this question using a two-sector, three-factor dynamic model with an asymptotic balanced growth path. The model allows a forward-looking assessment of development priorities based on lifetime welfare. A comparison of sector-specific productivity gains indicates that gains in non-agriculture are often more valuable, even when agriculture is initially the largest sector in terms of employment. We discuss the robustness of this result and how international capital mobility, capital intensity, demographics, the discount rate, and taxes on profits influence investment and structural transformation.

Suggested Citation

  • Fabio Monteforte & Mathan Satchi & Jonathan R. W. Temple, 2021. "Development priorities: the relative benefits of agricultural growth," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1122-1152.
    • Handle: RePEc:oup:oxecpp:v:73:y:2021:i:3:p:1122-1152.
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    More about this item

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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