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The Green Revolution, Structural Transformation, and Economic Development via Market Mechanisms

Author

Listed:
  • Takuma Kunieda

    (Kwansei Gakuin University)

  • Keisuke Okada

    (Kansai University)

  • Yasuyuki Sawada

    (The University of Tokyo)

  • Akihisa Shibata

    (Osaka University of Economics)

Abstract

Building on Matsuyama’s (1992) model, we examine how the Green Revolution contributed to structural transformation through relative-price adjustments. Using shift-share instruments based on Gollin et al. (2021) and Huang (2024), together with a novel projected-TFP instrument, we address the endogeneity of relative agricultural prices. We find that agricultural productivity gains lower relative prices and facilitate structural transformation when markets function effectively. Institutional quality critically shapes this mechanism: weak institutions distort price transmission and impede structural transformation. We further construct a price-based misallocation index capturing these distortions. Our findings highlight the importance of institutions in realizing the benefits of agricultural innovation.

Suggested Citation

  • Takuma Kunieda & Keisuke Okada & Yasuyuki Sawada & Akihisa Shibata, 2026. "The Green Revolution, Structural Transformation, and Economic Development via Market Mechanisms," KIER Working Papers 1131, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1131
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    Keywords

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    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
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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