Essays on growth of the agriculture and food industry sectors

This dissertation combines elements of the endogenous growth, industrial organization, and international trade theories to study the productivity growth of the agriculture and food industries. The objective of the study is to determine appropriate roles for government intervention in those sectors. In particular, this thesis tries to shed light on the role of public investments in infrastructure and research (R&D) and the importance of trade liberalization for productivity and, consequently, welfare growth. The effects of public investments and trade policies are rationalized within the context of the endogenous growth theory. In particular, Chapters 2 and 4 adopt ‘AK’ models of growth. While Chapter 2 studies the effects of public investment in infrastructure and research (public inputs) on productivity, Chapter 4 studies the effects of commercial policies and trade liberalization on productivity. In both cases, there are external effects that imply increasing returns to scale (i.e., nonconvexities), increasing incentives to capital accumulation and growth. Chapter 3, in contrast, adopts a patent race (Shumpeterian) model to study the evolution of market structure and incentives to innovate. The intensity of R&D competition affects the rate at which innovations arrive and, consequently, the productivity growth rate of the economy or sector under consideration. Again, external effects are present when innovations are publicly provided. The empirical findings provide little evidence about the contribution of public inputs and trade liberalization to productivity of US agriculture and the Argentine food industry, respectively. In the first case, the results are non-consistent with the theory of the firm. In the second, while the ‘openness’ variable impacts positively on capital accumulation, it does not affect productivity. Nevertheless, theoretical findings highlight a potential role for government investment in R&D by affecting the pricing of new technologies and, consequently, increasing the incentives to R&D investments by private firms