The Role of Agricultural Productivity on Structural Change

Abstract

Many authors have estimated and found that the productivity growth in agriculture is higher than that in non-agriculture in today's richest countries. Several papers suggested that growth in agricultural productivity was essential for today's richest countries to take off early. However, few articles noticed that growth in agricultural productivity is critical in driving structural change in today's richest countries. This paper studies a two-sector neoclassical growth model with subsistence agricultural consumption and shows that growth in agricultural productivity plays a more important role than growth in non-agricultural productivity in governing massive structural change in today's richest countries.

On the Structural Transformation of Rural Africa

“…The historical record and macro evidence is very clear on the key role that agriculture plays in stimulating the non-agricultural economy (Timmer 2002, Syrquin 2006, Barrett, Carter and Timmer, 2010, even in transitioned societies (Chen and Liao, 2015). The importance of the bidirectional linkages between rural agricultural and urban industrial economies has been a longstanding theme of the structural transformation literature, dating at least from Lewis (1954) and Johnston and Mellor (1961).…”