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Global economic growth and agricultural land conversion under uncertain productivity improvements in agriculture

Lanz, Bruno and Dietz, Simon and Swanson, Timothy (2017) Global economic growth and agricultural land conversion under uncertain productivity improvements in agriculture. American Journal of Agricultural Economics. ISSN 0002-9092 (In Press)

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Abstract

We study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level. We use a two-sector Schumpeterian model of growth, in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population. Agriculture demands land as an input, itself treated as a scarce form of capital. In our model both population and sectoral technological progress are endogenously determined, and key technological parameters of the model are structurally estimated using 1960-2010 data on world GDP, population, cropland and technological progress. Introducing random shocks to the evolution of total factor productivity in agriculture, we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages, and that it significantly affects both optimal consumption and population trajectories.

Item Type: Article
Official URL: https://academic.oup.com/ajae
Additional Information: © 2017 The Authors
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor > HD100 Land Use
S Agriculture > S Agriculture (General)
JEL classification: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods and Programming > C61 - Optimization Techniques; Programming Models; Dynamic Analysis
J - Labor and Demographic Economics > J1 - Demographic Economics > J11 - Demographic Trends and Forecasts
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O31 - Innovation and Invention: Processes and Incentives
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q1 - Agriculture > Q16 - R&D; Agricultural Technology; Agricultural Extension Services
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q24 - Land
Sets: Departments > Geography and Environment
Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Collections > Economists Online
Date Deposited: 17 Nov 2017 14:24
Last Modified: 17 Nov 2017 14:29
Projects: 290693 FOODSECURE
Funders: Seventh Framework Programme
URI: http://eprints.lse.ac.uk/id/eprint/85638

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