Global Agricultural Value Chains and Structural Transformation

Abstract

Since the mid-1900s, agricultural global value chains (AGVCs) have grown rapidly and transformed the nature of agri-food production around the world. Little is known, however, about how participation in AGVCs changes the structure of participating economies. Using a constructed panel dataset from 155 countries for the period 1991-2015, I find that, in response to high AGVC participation, both GDP and employment shares in the agricultural and services sectors increase, and that both factors decrease in the manufacturing sector. Counter to conventional wisdom about structural transformation, I uncover evidence that modern agrarian economies are leapfrogging the manufacturing sector to directly develop their agriculture and services sectors through their participation in AGVCs.