The relative decline of agriculture in the development process: some evidence for Argentinian economy (1955-2003)
DOI:
https://doi.org/10.35319/lajed.20054267Keywords:
Agriculture, Rybczynski effect, Relative pricesAbstract
The relative decline of agriculture in growing economies is a central feature of economic development and a major influence on agricultural policies. Conventional explanations for the relative decline of agriculture in developing countries stress demand-side phenomena, specifically Engel's law. This view has been challenged by quantitative analyses emphasizing supply-side effects such as differences in factor endowment growth rates (Rybczynski effect), the changes in the relative price of sector and differential rates of technical change. This paper shows a model of the transformation of the argentine economy, applying duality theory and a error correction mechanism to capture the dynamics resulting from disequilibrium and the costs of adjustment .The decline in agriculture's share of gross domestic product is found to be caused less by the relative price effects than by technical change observed in agriculture and in total economy.
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