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Economic growth and agricultural land conversion under uncertain productivity improvements in agriculture

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  • Bruno Lanz
  • Simon Dietz
  • Timothy Swanson

Abstract

We study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth, and the associated demand for food. We use a two-sector Schumpeterian model of growth, in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporary population. In addition, sectors differ in that agriculture also demands land as an input, itself treated as a scarce form of capital. In our model both population and sectoral technological progress are endogenously determined, and key technological parameters of the model are structurally estimated using 1960-2010 data on world GDP, population, cropland and technological progress. Introducing random shocks to the evolution of total factor productivity in agriculture, we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages, and that it significantly affects both consumption and population trajectories.

Suggested Citation

  • Bruno Lanz & Simon Dietz & Timothy Swanson, 2016. "Economic growth and agricultural land conversion under uncertain productivity improvements in agriculture," CIES Research Paper series 43-2016, Centre for International Environmental Studies, The Graduate Institute.
  • Handle: RePEc:gii:ciesrp:cies_rp_43
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    Cited by:

    1. Brausmann, Alexandra & Bretschger, Lucas, 2018. "Economic development on a finite planet with stochastic soil degradation," European Economic Review, Elsevier, vol. 108(C), pages 1-19.
    2. Tianqi Wang & Lijun Huang, 2018. "An Empirical Study on the Relationship between Agricultural Science and Technology Input and Agricultural Economic Growth Based on E-Commerce Model," Sustainability, MDPI, vol. 10(12), pages 1-12, November.
    3. Lanz, Bruno & Dietz, Simon & Swanson, Tim, 2018. "The Expansion of Modern Agriculture and Global Biodiversity Decline: An Integrated Assessment," Ecological Economics, Elsevier, vol. 144(C), pages 260-277.
    4. Maurizio Malpede, 2023. "Malaria and economic activity: Evidence from US agriculture," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1516-1542, October.
    5. Deepak Kumar & Kamaljit Singh & Sunil Phougat, 2022. "Impact of Agriculture Land and Population Density on Economic Growth: An Empirical Evidence from India," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 180-195.

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    More about this item

    Keywords

    Economic growth; Stochastic control; Agricultural productivity; Endogenous innovations; Land conversion; Population dynamics; Food security.;
    All these keywords.

    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
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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