IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/53606.html
   My bibliography  Save this paper

Is Agricultural Productivity Growth Good for Industrialization? Infrastructures and the Welfare Maximizing Tax Rate

Author

Listed:
  • Kamei, Keita
  • Sasaki, Hiroaki

Abstract

This paper develops a dynamic Ricardian trade model that incorporates productive infrastructures into the manufacturing sector financed by tax. We investigate the relationship between the timing of opening trade and total welfare. We also compare the two kinds of total welfare: the total welfare that a country obtains by closing international trade until it has a comparative advantage in manufacturing and then engaging in free trade and the total welfare that the country obtains by specializing in agriculture according to the law of comparative advantage from the beginning. The main results are as follows: (1) there is the optimal tax rate maximizing the total welfare; (2) an increase in agricultural productivity can accelerate the timing of opening trade, which, however, does not necessarily improve the total welfare; and (3) the total welfare under specialization in manufacturing can be higher than that under specialization in agriculture depending on conditions.

Suggested Citation

  • Kamei, Keita & Sasaki, Hiroaki, 2014. "Is Agricultural Productivity Growth Good for Industrialization? Infrastructures and the Welfare Maximizing Tax Rate," MPRA Paper 53606, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:53606
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/53606/1/MPRA_paper_53606.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Colin Kirkpatrick & Armando Barrientos, 2004. "The Lewis Model After 50 Years," Manchester School, University of Manchester, vol. 72(6), pages 679-690, December.
    2. Leonid Azarnert, 2014. "Agricultural Exports, Tariffs and Growth," Open Economies Review, Springer, vol. 25(4), pages 797-807, September.
    3. Jonathan Temple, 2005. "Dual Economy Models: A Primer For Growth Economists," Manchester School, University of Manchester, vol. 73(4), pages 435-478, July.
    4. Toru Kikuchi, 2004. "Agricultural Productivity, Business Services, and Comparative Advantage," Open Economies Review, Springer, vol. 15(4), pages 375-383, October.
    5. repec:hoo:wpaper:e-92-3 is not listed on IDEAS
    6. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    7. Matsuyama, Kiminori, 1992. "Agricultural productivity, comparative advantage, and economic growth," Journal of Economic Theory, Elsevier, vol. 58(2), pages 317-334, December.
    8. Redding, Stephen, 1999. "Dynamic Comparative Advantage and the Welfare Effects of Trade," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 15-39, January.
    9. Jing Jun Chang & Been-Lon Chen & Mei Hsu, 2006. "Agricultural Productivity and Economic Growth: Role of Tax Revenues and Infrastructures," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 891-914, April.
    10. Wong, Kar-yiu & Yip, Chong K, 1999. "Industrialization, Economic Growth, and International Trade," Review of International Economics, Wiley Blackwell, vol. 7(3), pages 522-540, August.
    11. Spilimbergo, Antonio, 2000. "Growth and Trade: The North Can Lose," Journal of Economic Growth, Springer, vol. 5(2), pages 131-146, June.
    12. Hiroaki Sasaki, 2008. "International Trade And Industrialization With Capital Accumulation And Skill Acquisition," Manchester School, University of Manchester, vol. 76(4), pages 464-486, July.
    13. Xiaobing Wang & Jenifer Piesse, 2013. "The Micro-Foundations Of Dual Economy Models," Manchester School, University of Manchester, vol. 81(1), pages 80-101, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    productive infrastructure; industrialization; timing of opening trade; agricultural productivity;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    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:pra:mprapa:53606. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.