North–South Trade Agreements and Agricultural Input Use

Abstract

We estimate how developing countries’ access to more advanced countries’ markets, proxied by regional trade agreements (RTAs) with such countries, affects their agricultural input use (namely, the use of fertilizer and agricultural machinery). Using pooled OLS with country and year fixed effects and alternative instrumental variables, we find that having RTAs with high-income countries is associated with higher consumption of fertilizer relative to those countries that do not have such agreements—about 10 percent more. A similar result is obtained for the use of agricultural machinery per 100 square kilometres: in particular, relative to those countries that do not have RTAs with high-income countries, those countries that do have such RTAs use more than twice of agricultural machinery per 100 square kilometres.