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On Why Agriculture Declines with Economic Growth
Author(s) -
Anderson Kym
Publication year - 1987
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.1987.tb00020.x
Subject(s) - agriculture , economics , productivity , open economy , comparative advantage , production (economics) , agricultural productivity , agricultural economics , natural resource economics , international trade , macroeconomics , ecology , biology , exchange rate
When economic growth is characterised by a slow rise in the demand for food and rapid growth in farm relative to non‐farm productivity, it is understandable that agriculture in a closed economy declines in relative terms as that economy develops. But why should agriculture decline in virtually all open growing economies as well, including those able to retain a comparative advantage in agricultural products? A key part of the answer is that the demand for non‐tradable goods tends to be income elastic, so resources are diverted to their production even in open economies .