Agricultural Economics Department

 

Date of this Version

January 2007

Comments

Agricultural Economics,vol. 36(2007), 2-03: 181-190 .

Abstract

In this paper, we develop an empirical model to decompose the evolution of the agricultural share of GDP into three components: price changes, factor endowment changes and technological change. Our results suggest that relative prices have a positive but small influence on the share of agriculture in GDP in both the long-run and the short-run. An increase in capital per unit of labor, on the other hand, is associated with a smaller agricultural share. Technical change has been biased in favor of the agricultural sector but this effect has been swamped by the magnitude of the input effects, in particular, the changes in the capital-labor ratio.