IDEAS home Printed from https://ideas.repec.org/p/ags/saea16/230031.html
   My bibliography  Save this paper

Comparative Advantage or Competitive Advantage in Explaining Agricultural Trade?

Author

Listed:
  • Moon, Wanki
  • Pino, Gabriel

Abstract

Comparative advantage is perhaps one of the most celebrated concept/theory in the history of economics since its birth in the late 18th century. It has dominated the field of international trade not only in academics but also in economic/development policy circles. International trade in agriculture, however, has been a notable exception. Agricultural protectionism disallowed the theory of comparative advantage to be valid in explaining agricultural trade. This paper attempts to shed light on the role of the state in determining international competitiveness of agricultural commodities. Farmers are neither the ones who make decisions whether or not to enter international markets nor are the ones who invest in R&D and develop new technologies with the goal of enhancing international competitiveness. Liberalizing trade is likely to send signals first to trading corporations, grain handlers, and governments and transmitted to farmers indirectly. Freer trade would initiate the process of specialization of production across the world, generating benefits in terms of greater production and lower prices, but offering little additional incentive for individual farm producers to reduce costs or adopt new technologies for the purpose of enhancing export opportunities (hence, lacking the creative destruction processes like in the manufacturing sector in which firm level strategies would determine international competitiveness). However, states may compete with each other to expand their exports or to decrease their dependence on food imports with strategic investments in agricultural infrastructure. The point is that state level strategies are likely to determine the pattern of agricultural trade in the long run.

Suggested Citation

  • Moon, Wanki & Pino, Gabriel, 2016. "Comparative Advantage or Competitive Advantage in Explaining Agricultural Trade?," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230031, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea16:230031
    DOI: 10.22004/ag.econ.230031
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/230031/files/2016SAEA_AgEconSearch_manuscript_AgriculturalTrade_SanAntonio_January22_2016.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.230031?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    2. Keller, Wolfgang, 2000. "Do Trade Patterns and Technology Flows Affect Productivity Growth?," The World Bank Economic Review, World Bank Group, vol. 14(1), pages 17-47, January.
    3. Robert Evenson & Prabhu Pingali (ed.), 2010. "Handbook of Agricultural Economics," Handbook of Agricultural Economics, Elsevier, edition 1, volume 4, number 1.
    4. Richard Tiffin & Xavier Irz, 2006. "Is agriculture the engine of growth?," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 79-89, July.
    5. Douglas Gollin & Stephen Parente & Richard Rogerson, 2002. "The Role of Agriculture in Development," American Economic Review, American Economic Association, vol. 92(2), pages 160-164, May.
    6. Nancy Birdsall, 2010. "The Washington Consensus: Assessing a Damaged Brand - Working Paper 213," Working Papers 213, Center for Global Development.
    7. Daniel M. Bernhofen & John C. Brown, 2005. "An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan," American Economic Review, American Economic Association, vol. 95(1), pages 208-225, March.
    8. James R. MARKUSEN, 2021. "Multinationals, Multi-Plant Economies, And The Gains From Trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
    9. Philippe Aghion & Christopher Harris & Peter Howitt & John Vickers, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Oxford University Press, vol. 68(3), pages 467-492.
    10. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    11. Muradian, Roldan & Martinez-Alier, Joan, 2001. "Trade and the environment: from a 'Southern' perspective," Ecological Economics, Elsevier, vol. 36(2), pages 281-297, February.
    12. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    13. Pedro Cavalcanti Ferreira & JosÈ Luiz Rossi, 2003. "New Evidence from Brazil on Trade Liberalization and Productivity Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1383-1405, November.
    14. Kim, Euysung, 2000. "Trade liberalization and productivity growth in Korean manufacturing industries: price protection, market power, and scale efficiency," Journal of Development Economics, Elsevier, vol. 62(1), pages 55-83, June.
    15. Daron Acemoglu & Jaume Ventura, 2002. "The World Income Distribution," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 659-694.
    16. Prema-chandra Athukorala, 2011. "Production Networks and Trade Patterns in East Asia: Regionalization or Globalization?," Asian Economic Papers, MIT Press, vol. 10(1), pages 65-95, Winter/Sp.
    17. Joseph E. Stiglitz, 1999. "More instruments and broader goals: moving toward the Post-Washington Consensus," Brazilian Journal of Political Economy, Center of Political Economy, vol. 19(1), pages 101-128.
    18. Chao Yang Peng & Christopher Findlay & Randy Stringer, 1997. "Food Security in Asia," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 11(1), pages 1-17, May.
    19. Wolfgang Keller, 2004. "International Technology Diffusion," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 752-782, September.
    20. Diao, Xinshen & Somwaru, Agapi & Roe, Terry L., 2001. "A Global Analysis Of Agricultural Trade Reform In Wto Member Countries," Bulletins 12984, University of Minnesota, Economic Development Center.
    21. Birdsall, Nancy & de la Torre, Augusto & Caicedo, Felipe Valencia, 2010. "The Washington consensus : assessing a damaged brand," Policy Research Working Paper Series 5316, The World Bank.
    22. Pingali, Prabhu, 2010. "Agriculture Renaissance: Making "Agriculture for Development" Work in the 21st Century," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 4, chapter 74, pages 3867-3894, Elsevier.
    23. Sharmistha Self & Richard Grabowski, 2007. "Economic development and the role of agricultural technology," Agricultural Economics, International Association of Agricultural Economists, vol. 36(3), pages 395-404, May.
    24. Dixit, Avinash & Norman, Victor, 1986. "Gains from trade without lump-sum compensation," Journal of International Economics, Elsevier, vol. 21(1-2), pages 111-122, August.
    25. Gore, Charles, 2000. "The Rise and Fall of the Washington Consensus as a Paradigm for Developing Countries," World Development, Elsevier, vol. 28(5), pages 789-804, May.
    26. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Moon, Wanki, 2017. "Developing an Institutional Political Economy Framework Integrating Firms, Markets, and States," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252532, Southern Agricultural Economics Association.
    2. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2017. "Innovations, growth and participation in advanced economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 14(2), pages 293-351, April.
    3. Ricardo A. López, 2005. "Trade and Growth: Reconciling the Macroeconomic and Microeconomic Evidence," Journal of Economic Surveys, Wiley Blackwell, vol. 19(4), pages 623-648, September.
    4. Berthold Herrendorf & Arilton Teixeira, 2005. "How Barriers to International Trade Affect TFP," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(4), pages 866-876, October.
    5. Mollick, André Varella & Cabral, René, 2009. "Productivity effects on Mexican manufacturing employment," The North American Journal of Economics and Finance, Elsevier, vol. 20(1), pages 66-81, March.
    6. Gancia, Gino & Bonfiglioli, Alessandra, 2008. "North-South trade and directed technical change," Journal of International Economics, Elsevier, vol. 76(2), pages 276-295, December.
    7. Sunghoon Chung, 2012. "Environmental Regulation and the Pattern of Outward FDI: An Empirical Assessment of the Pollution Haven Hypothesis," Departmental Working Papers 1203, Southern Methodist University, Department of Economics.
    8. Marc J. Melitz & Stephen J. Redding, 2021. "Trade and innovation," CEP Discussion Papers dp1777, Centre for Economic Performance, LSE.
    9. Wolfgang Keller & Stephen Ross Yeaple, 2013. "The Gravity of Knowledge," American Economic Review, American Economic Association, vol. 103(4), pages 1414-1444, June.
    10. Henry Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers dp0508, Centre for Economic Performance, LSE.
    11. Tica Josip & Šikić Luka, 2019. "Endogenous Convergence and International Technological Diffusion Channels," South East European Journal of Economics and Business, Sciendo, vol. 14(2), pages 34-53, December.
    12. Harrison, Ann & Rodríguez-Clare, Andrés, 2010. "Trade, Foreign Investment, and Industrial Policy for Developing Countries," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4039-4214, Elsevier.
    13. Gong, Guan & Keller, Wolfgang, 2003. "Convergence and polarization in global income levels: a review of recent results on the role of international technology diffusion," Research Policy, Elsevier, vol. 32(6), pages 1055-1079, June.
    14. Papageorgiou, Chris & Savvides, Andreas & Zachariadis, Marios, 2007. "International medical technology diffusion," Journal of International Economics, Elsevier, vol. 72(2), pages 409-427, July.
    15. Sayef Bakari & Sofien Tiba, 2022. "Agricultural Exports, Agricultural Imports And Economic Growth In China," Journal of Smart Economic Growth, , vol. 7(3), pages 35-61, September.
    16. Serkan Degirmenci, 2011. "Do Institutions Matter for Regional Economic Growth and Development? The Case of Turkey," ERSA conference papers ersa11p1180, European Regional Science Association.
    17. Klenow, Peter J. & Rodriguez-Clare, Andres, 2005. "Externalities and Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 11, pages 817-861, Elsevier.
    18. Betina Dimaranan & Elena Ianchovichina & Will Martin, 2009. "How will growth in China and India affect the world economy?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 551-571, October.
    19. Herrendorf, Berthold & Teixeira, Arilton, 2002. "How Trade Policy Affects Technology Adoption and Productivity," CEPR Discussion Papers 3486, C.E.P.R. Discussion Papers.
    20. Henry, Michael & Kneller, Richard & Milner, Chris, 2009. "Trade, technology transfer and national efficiency in developing countries," European Economic Review, Elsevier, vol. 53(2), pages 237-254, February.

    More about this item

    Keywords

    International Relations/Trade;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:saea16:230031. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.