To gain a deeper understanding of the dynamic process of economic growth, a comparative sectoral analysis is used to examine determinants of growth in agricultural and manufacturing production across countries and over time. Comparable data sets on physical capital are necessary. In addition to data on sectoral fixed capital, I construct measures of livestock and treestock which are significant components of agricultural capital, though their roles are changing.
The critical role that physical capital plays in economic growth is revealed. The elasticities of fixed capital are sizable, significant, and increasing over time. Treestocks are revealed to be significant in agricultural production. Countries that are more productive use techniques that are more capital-intensive, and over time, investment in capital permits the adoption of more productive techniques.
The pace at which new technologies are adopted is determined by the economic environment, as shown by the state variables. Productivity is positively related to the relative level of development in a country and the relative prices, and negatively related to price variability and inflation. In agriculture, the measure of the implemented technologies has a positive impact. In manufacturing, the positive impact of technology is picked up by the schooling variable. The degree of openness to trade has a positive effect on agricultural productivity and a negative effect on manufacturing.
The relative prices of both agriculture and manufacturing declined over the sample period, as output growth exceeded growth in demand in these sectors. This had a direct negative effect on productivity, and also impacted the intersectoral factor demands (decreasing the demand for capital and labor in agriculture and manufacturing, and hence increasing demand in other sectors of the economy, specifically services).
Structural transformation is achieved through the reallocation of factors of production, which occurs in response to changing factor prices. Resources flow to the direction of higher returns. Using the results from the estimations of the production functions, I estimate the shadow rents and shadow wages as the marginal value products. The shadow rate of return on fixed capital is quite high, consistent with the high growth rate of this input.
|Commitee:||Kortum, Samuel, Stokey, Nancy|
|School:||The University of Chicago|
|School Location:||United States -- Illinois|
|Source:||DAI-A 72/09, Dissertation Abstracts International|
|Subjects:||Agricultural economics, Labor economics|
|Keywords:||Agriculture, Manufacturing, Physical capital|
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