Commodity Revenues, Agricultural Sector and the Magnitude of Deindustrialization: A Novel Multisector Perspective

Abstract

This study puts forward a model of a multisector economy and embeds it in a novel theoretical framework to address the relationship between commodity revenues and manufacturing output with a special focus on the role of the agricultural sector. The three-sector model lays the groundwork for analyzing policy choices in more complex sectoral settings. Based on the theoretical analysis, the study identifies the weight of the individual economic sectors in the public revenue generation as a determinant of the magnitude of rent seeking epitomized in the crowding out effect of investments in manufacturing. We find that enclave agriculture contributes to the deindustrialization pressure in the face of natural resource windfalls. The central finding of the multisector analysis is the conclusion that not diversification per se but rather a diversification with the substantial domestic factor or market orientation has the capability to limit the magnitude of deindustrialization. For the empirical validation of the theoretical findings, the study employs fixed effects, fully modified OLS, dynamic common correlated effects estimators and dynamic fixed effects estimators for the dataset of 113 developing and transition economies for 1963–2014 period. The estimations reveal that natural resource revenues correspond with a higher level of the manufacturing sector output. In the economies with a low level of economic diversification, commodity bonanza leads however to the shrinkage of the manufacturing. In the commodity revenue dependent settings, nevertheless, agricultural sector exports have a negative impact on the performance of the manufacturing sector. These findings are in line with the predictions of the theoretical model.

Environmental Policy Stringency, Technical Progress and Pollution Haven Hypothesis

“…Hence, the heavy industry that has the greatest carbon footprint faces a greater regulatory burden in the face of the increasing stringency of environmental regulations than the cleaner tertiary sector or knowledge economy. This has been confirmed in the framework of a multisector elasticity model in Sadik-Zada, Loewenstein and Hasanli [64].…”

Carbon Emissions Trading and Sustainable Development in China: Empirical Analysis Based on the Coupling Coordination Degree Model

“…Secondly, in areas with more developed industries, the growth trend of sustainable development levels is not ideal. These regions should adjust their economic and industrial structures which is considered the main reason for the resource curse [ 46 ], increase their proportions of high-tech industries and service industries, and reduce their proportions of resource-dependent industries and high-polluting industries. Finally, the better the economic and social development of a region, the better the level of sustainable development.…”

Bonferroni Probabilistic Ordered Weighted Averaging Operators Applied to Agricultural Commodities’ Price Analysis

“…It is derived from the fact that at the beginning of planting, the price is one figure, and when the harvest is made, it becomes a very different figure. In this sense, it is necessary to use different techniques and models that can be adapted to the volatility of the prices and uncertainty of the market [63,64]-such tools can be the aggregation operators, and this field has been expanded through different techniques and applications [18].…”