Agricultural productivity and trade: Argentina and the U.S.A.

Chichilnisky, Graciela and McLeod, D. (1984): Agricultural productivity and trade: Argentina and the U.S.A. Published in: Global Analysis and Projections Division No. No. 1984-5 (October 1984): pp. 1-57.

Abstract

We study labor productivity in agriculture within a two-region, two factor and two commodity economy. Increases in productivity can lead to higher or to lower agricultural prices, depending on the internal structure of the economy. We give necessary and sufficient conditions for either outcome; these depend on technologies, factor endowments and export levels. In a developing economy, improvements in productivity generally lead to higher agricultural prices, i.e. to better terms of trade between agriculture and industry.

In an industrial economy increasing productivity leads instead to lower agricultural prices. The sign of one expression determines the turning point between these two opposite price responses and allows us to explain the effects of trade and investment policies on domestic output and welfare. Simulations of the model are reported with data for Argentina and the U.S.A. circa 1970.

• Item Type: MPRA Paper
• Language: English
• Keywords: north-south model; north-south; labor productivity; export policies; asymmetric effects; agricultural productivity; agriculture pricing; trade; development; Argentina; United States; growth; expansion; domestic incomes; employment
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q11 - Aggregate Supply and Demand Analysis ; Prices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q17 - Agriculture in International Trade

References

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G. Chichilnisky, "North-South trade and export-led policies," Journal of Development Economics (1983).

G. Chichilnisky, H. Farzin and D. McLeod (1983), "Export policy and terms of trade: the case of Argentina 1960-1980," working paper.

Heal, G. and McLeod, D. (1983), "Stability, profits and gains from trade," Journal of Development Economics.

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U.S. DEPT. OF AGRICULTURE (1972), Argentina: Growth and potential of the grain and livestock sectors, Foreign Agricultural Economic Report #78, Economic Research Service (Wash. D. C.).