What Is the Role of Trade Liberalisation and Food Commodity Price Booms in the Agricultural Sector? Implications for the Export-Led Growth Strategy

Abstract

Has trade liberalisation benefitted the agricultural sector? Evidence shows that exports growth leads to employment growth intensity in the agricultural sector compared to increased output growth post-2009. This is in stark contrast to what was the case, for instance, during the 1990s. The agricultural sector employment growth responds more to exports growth compared to output growth. The implication is that farmers are more responsive to exports demand and this increases the employment growth intensity in the agricultural sector. The “output growth-driven exports growth” hypothesis and strategy best explains developments in the agricultural sector. Trade openness and the export-oriented growth strategy auger well for the agricultural sector output growth, employment growth and labour productivity growth. In addition, food commodity price booms (busts) result in an increase (decline) in exports growth, output growth and employment growth.