Munich Personal RePEc Archive

Det tekno-økonomiske paradigmeskiftet. Konsekvenser for norske distrikts- og ressurbaserte næringer

Reinert, Erik S. (1997): Det tekno-økonomiske paradigmeskiftet. Konsekvenser for norske distrikts- og ressurbaserte næringer. Published in: Norsk Investorforums Publikasjonsserie No. 1 (1997)

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Abstract

This report, commissioned by the Norwegian Farmers' Association (Norges Bondelag) and Norway's Ministry of Local Government and Regional Development, takes a long term view of the theoretical and practical relationships between rural industries - agriculture and forestry - and urban industries, arguing that the qualitative differences between these types of activities create a need for different policy instruments in the two sectors. While agriculture operates under diminishing returns (the best land is normally used first) and perfect competition, the manufacturing industry operates under increasing returns to scale and imperfect competition. The resulting barriers to entry in manufacturing combined with frequent innovations create a dynamic imperfect competition which allows for higher wages and higher profits in manufacturing than in agriculture. It is argued that these qualitative differences were understood in the 1930s as a result of the crisis, and that allowing monopolies in the agricultural sectors (also in the United States) was a result of an understanding that agriculture needed to become "more like manufacturing" (i.e. freeing agriculture from the curse of perfect competition). In other words - as it was commonly understood well into the post-WW II period - the problems of the agricultural sector are of a kind that cannot be solved by increasing efficiency alone. Recommendations on how to make agriculture "more like manufacturing" in the present technological setting are presented.

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