Agricultural productivity and economic growth: Role of tax revenues and infrastructures

Jing Jun Chang, Been Lon Chen*, Mei Hsu


研究成果: 雜誌貢獻期刊論文同行評審

10 引文 斯高帕斯(Scopus)


To encourage economic growth in a developing economy, higher agricultural productivity has been believed to enhance the manufacturing sector's development, which provides the transition into industrialization. Although this positive linkage between agricultural productivity and economic growth has been judged to be incorrect, based upon the comparative advantage argument in a model of small-open economies by Matsuyama (1992), this article revisits the linkage by extending Matsuyama's model by introducing the revenue-generating effect, which is missing in his model. As agriculture is an important source of taxation in an early stage of economic development, higher agricultural productivity generates more tax revenues and facilitates spending on infrastructure. By introducing government taxation and infrastructure expenditure, we show that under proper conditions, higher agricultural productivity creates a positive growth effect via the revenue generation that dominates the negative growth effect through the comparative advantage. Moreover, introducing infrastructure expenditure may shift the manufacturing sector's original comparative disadvantage into comparative advantage, thereby enabling a trapped economy to take off and eventually industrialize. From the early stages of economic development in Japan, Taiwan, and Korea, we can quantitatively assess an obvious net positive effect of agricultural productivity upon labor allocation and economic growth.

頁(從 - 到)891-914
期刊Southern Economic Journal
出版狀態已發佈 - 2006 4月

ASJC Scopus subject areas

  • 經濟學與計量經濟學


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