THE THEORY OF AGRICULTURAL COMPARATIVE ADVANTAGE (TRADE)

STEPHEN LAWRENCE HALEY, Purdue University

Abstract

In low-income countries, development planners confront the question of whether the country should export agricultural products, import them, or strive for self-sufficiency. In principle, a properly formulated theory of agricultural comparative advantage should provide a framework for evaluation of food self-sufficiency policies and the agriculture-versus-industry debate. The goal of this research is to revise existing Heckscher-Ohlin comparative advantage theory to include features which are important to agriculture. Included are treatments of differing agricultural production functions, heterogeneous land endowments, capital specificity, and nonhomothetic demand patterns. The results of this study suggest that capital intensity in agriculture is important for both agricultural exporters and importers alike. The effect of population size differentiates the import nations from the export nations. For countries more or less self-sufficient in agricultural trade, capital intensity is less important. Differences in land endowments and per capita income levels do not differentiate countries on the basis of trade. Examination of countries on the basis of geographical and income-class groupings highlight these conclusions with the added advantage of the ability to observe differences in implemented agricultural technologies across trade status groups.

Degree

Ph.D.

Subject Area

Business community

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