Agricultural Productivity and Structural Transformation: Evidence from Brazil

Tuesday, 22 November, 2016
In this paper published in the American Economic Review, Bustos, Caprettini and Ponticelli (2016) study the effects of the adoption of new agricultural technologies on structural transformation. To guide empirical work, the authors present a simple model where the effect of agricultural productivity on industrial development depends on the factor bias of technical change. They test the predictions of the model by studying the introduction of genetically engineered soybean seeds in Brazil, which had heterogeneous effects on agricultural productivity across areas with different soil and weather characteristics. They find that technical change in soy production was strongly labor saving and led to industrial growth, as predicted by the model.