Agriculture, Predation and Development
Predation attracts a relatively high portion of labor in developing countries and obstructs development. Agriculture also has an important weight in employment in these countries. We formulate a model in which agents devote time either to predation or to producing agricultural and manufactured goods with the following features: a subsistence level of agricultural goods must be reached and, consequently, poor countries devote more resources to agriculture; agriculture is more land intensive and, thus, has a lower labor share than manufacturing; and incentives to devote time to production increase with the labor share. The share of manufactured goods in GDP increases throughout the transition, raising the labor share, which discourages predation and fosters production. This mechanism involves an amplification effect of the differences in productivity among countries due to the reallocation of labor from predation to production. Institutional quality plays a crucial role in this process, since it discourages predation.
|Date of creation:||10 Oct 2012|
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