Does Agricultural Growth in Poor Countries Harm Agricultural‐Exporting Rich Countries?

Abstract

AbstractThe commonly held view that agricultural‐exporting developed countries would lose from agricultural growth in less‐developed countries (LDCs) is shown to be based on an incomplete argument. It considers only the effects on LDC agricultural supply, or at best only that and the first‐round effects of increased farmer incomes on the demand for tradables. What also needs to be considered is the effect on the demand for nontradables and hence the second‐round effects of increased spending by producers of nontradables. When all these effects are considered, the positive correlations obtained between agricultural output growth in LDCs and agricultural imports from developed countries is not surprising. It is then shown that selling or giving away agricultural research and management skills to developing countries can be beneficial to developed countries, including agricultural exporters: by setting out to do good, they may end up also doing well.