Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2017 Jul:127:133-152.
doi: 10.1016/j.jdeveco.2017.02.007.

Fertilizing growth: Agricultural inputs and their effects in economic development

John W McArthur  1 , Gordon C McCord  2
Affiliations

Fertilizing growth: Agricultural inputs and their effects in economic development

John W McArthur et al. J Dev Econ. 2017 Jul.

Abstract

This paper estimates the role of agronomic inputs in cereal yield improvements and the consequences for countries' processes of structural change. The results suggest a clear role for fertilizer, modern seeds and water in boosting yields. We then test for respective empirical links between agricultural yields and economic growth, labor share in agriculture and non-agricultural value added per worker. The identification strategy includes a novel instrumental variable that exploits the unique economic geography of fertilizer production and transport costs to countries' agricultural heartlands. We estimate that a half ton increase in staple yields generates a 14 to 19 percent higher GDP per capita and a 4.6 to 5.6 percentage point lower labor share in agriculture five years later. The results suggest a strong role for agricultural productivity as a driver of structural change.

Keywords: Agriculture; Fertilizer; Green revolution; Growth; Structural change.

PubMed Disclaimer

Figures

Fig. 1
Fig. 1
Cereal yields across developing regions, 1961–2001.
Fig. 2
Fig. 2
Fertilizer use in developing regions, 1961–2001.
Fig. 3
Fig. 3
Cereal yields and fertilizer use, selected countries, 1961–2001.
Fig. 4
Fig. 4
Fertilizer price index (Real US$ terms, 2005=100).
Fig. 5
Fig. 5
Cost-adjusted distance to major fertilizer production site.
Fig. 6
Fig. 6
Fertilizer prices in 1999 and distance to fertilizer production site.
Fig. 7
Fig. 7
Fertilizer use in 1985 and distance to fertilizer production site.
Fig. 8
Fig. 8
Yields and relative rates of assistance to agriculture.
Fig. 9
Fig. 9
Coefficients on different lags of instrumented cereal yield in a specification following Table 4 Columns III–IV.
Fig. 10
Fig. 10
Coefficient on different lags of instrumented cereal yield in a specification following Table 6 Columns VII–VIII.
Fig. 11
Fig. 11
Coefficients on different lags of instrumented cereal yield in a specification following Table 7 Columns VI–VII.
See this image and copyright information in PMC

References

    1. Amiti Mary, Cameron Lisa. Economic geography and wages. Rev. Econ. Stat. 2007;89(1):15–29.
    1. Anderson, Kym, Nelgen, Signe, 2013. Updated National and Global Estimates of Distortions to Agricultural Incentives, 1955 to 2011. 〈http://www.worldbank.org/agdistortions〉.
    1. Anderson Kym, Rausser Gordon, Swinnen Johan. Political economy of public policies: insights from distortions to agricultural and food markets. J. Econ. Lit. 2013;51(2):423–477.
    1. Arellano Manuel, Bond Stephen R. Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev. Econ. Stud. 1991;58(2):277–297.
    1. Barro Robert J., Lee Jong Wha. A new data set of educational attainment in the world, 1950–2010. J. Dev. Econ. 2013;104:184–198.