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Growth Pattern, Sustainability And Trade In A Land Constrained Economy

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  • Irz, Xavier T.
  • Roe, Terry L.

Abstract

This paper develops a two-sector model of growth where agriculture is considered explicitly. Key features of the model include: the reliance of agricultural production on a fixed but degrading resource base, the use by the farm sector of industrially produced inputs and differing rates of technological progress in the two sectors. On the demand side, the low income elasticity for food as well as the life-sustaining function of food consumption are recognized. In this simplified framework, the sustainability of growth can be related to the existence of a steady state reflecting the ability of the economy to feed its population. This property is used to identify the characteristics within and outside of agriculture conducive to the sustainability of a land-constrained economy. The empirical application identifies sub-Saharan Africa as the region of the world facing the most important challenges in terms of sustainability. The second part of the paper makes use of the transitional properties of the model to analyse the relationship between agricultural productivity and growth performance. For a closed economy, the model unambiguously supports the view that high agricultural productivity is conducive to fast growth and industrialization. Once the country is allowed to trade, however, the relationship becomes more complex, but a numerical experiment illustrates how trade liberalization can accelerate the growth of a country poorly endowed in agricultural resources.

Suggested Citation

  • Irz, Xavier T. & Roe, Terry L., 2000. "Growth Pattern, Sustainability And Trade In A Land Constrained Economy," 2000 Annual meeting, July 30-August 2, Tampa, FL 21762, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea00:21762
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    File URL: http://purl.umn.edu/21762
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    References listed on IDEAS

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    1. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    2. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    3. Hartwick, John M, 1977. "Intergenerational Equity and the Investing of Rents from Exhaustible Resources," American Economic Review, American Economic Association, vol. 67(5), pages 972-974, December.
    4. Maurice Schiff & Alberto Valdes, 1994. "The Plundering of Agriculture in Developing Countries," Reports _013, World Bank Latin America and the Caribean Region Department.
    5. Sachs, J-D & Warner, A-M, 1995. "Natural Resource Abundance and Economic Growth," Papers 517a, Harvard - Institute for International Development.
    6. Pinstrup-Andersen, Per & Pandya-Lorch, Rajul & Rosegrant, Mark W., 1997. "The world food situation," Food policy reports 7, International Food Policy Research Institute (IFPRI).
    7. Ben-David, Dan, 1998. "Convergence clubs and subsistence economies," Journal of Development Economics, Elsevier, vol. 55(1), pages 155-171, February.
    8. Martin, Will & Mitra, Devashish, 1999. "Productivity growth and convergence in agriculture and manufacturing," Policy Research Working Paper Series 2171, The World Bank.
    9. Vernon Ruttan, 1998. "The new growth theory and development economics: A survey," Journal of Development Studies, Taylor & Francis Journals, vol. 35(2), pages 1-26.
    10. Robertson, P.E., 1998. "Growth Accounting, Growth Theory and the East Asian Miracle," Papers 98/11, New South Wales - School of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    sustainability; agriculture and growth; dynamic general equilibrium model; International Development; O41; O13; F11;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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