Journal of Economic Growth

, Volume 16, Issue 4, pp 343–370 | Cite as

The agricultural basis of comparative development

Article

Abstract

This article shows, in a two-sector Malthusian model of endogenous population growth, that output per capita, population density, and industrialization depend upon the labor intensity of agricultural production. Because the diminishing returns to labor are less pronounced, high labor intensity (as in rice production) leads not only to a larger population density but also to lower output per capita and a larger share of labor in agriculture. Agronomic and historical evidence confirm that there are distinct, inherent differences between rice and wheat production. A calibration of the model shows that a relatively small difference in labor intensity in agriculture can account for a large portion of the observed differences in industrialization, output per capita, and labor productivity between Asia and Europe prior to the Industrial Revolution. Significantly, these differences can be explained even though sector-level total factor productivity levels and the efficiency of factor markets are held constant in the two regions.

Keywords

Agriculture Production Structural transformation Endogenous population growth Malthus Growth 

JEL Classification

N10 N50 O41 O11 O13 Q10 

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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.University of HoustonHoustonUSA

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