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Accounting for Agricultural Decline with Economic Growth in Taiwan

Author

Listed:
  • Ling Sun

    (Providence University)

  • Lilyan E. Fulginiti

    (University of Nebraska)

  • E. Wesley Peterson

    (University of Nebraska)

Abstract

In this paper we propose an empirical model to decompose the evolution of the agricultural GDP share of Taiwan into three components: price changes, factor endowment changes and technological change. The full sample period is 1967 to 1997. The data were first tested to assess whether the time series are nonstationary and cointegrated. After confirming their nonstationarity and cointegrated relation- ship, we then employ an error correction model (ECM) in the empirical estimation to capture the dynamic as well as long-run equilibrium relationship among those economic variables. The results suggest that relative prices have a positive influence on the share of agriculture in GDP in both the long-run and the short-run. An increase in capital per unit of labor, on the other hand, is associated with a smaller agricultural share. This result is consistent with the Rybczynski Theorem. Technical change has been biased in favor of this sector. The strong negative impact of the change in factor endowments seems to dominate any possible positive effect of relative prices and technical change. This result makes a strong case for a Heckscher-Ohlin type model as a basis of understanding the development of the Taiwanese economy.

Suggested Citation

  • Ling Sun & Lilyan E. Fulginiti & E. Wesley Peterson, 2005. "Accounting for Agricultural Decline with Economic Growth in Taiwan," Development and Comp Systems 0502022, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:0502022
    Note: Type of Document - pdf; pages: 27
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/dev/papers/0502/0502022.pdf
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    References listed on IDEAS

    as
    1. Jacob L. Weisdorf, 2006. "From domestic manufacture to Industrial Revolution: long-run growth and agricultural development," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 264-287, April.
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    Cited by:

    1. Saenz, Mariana, 2010. "Structural Change in the Colombian Coffee Sector: 1975-2007," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61462, Agricultural and Applied Economics Association.
    2. Esposti, Roberto, 2014. "On why and how agriculture declines," Structural Change and Economic Dynamics, Elsevier, vol. 31(C), pages 73-88.
    3. Tey, (John) Yeong-Sheng, 2008. "The Relative Decline of Agriculture in China," MPRA Paper 15057, University Library of Munich, Germany.
    4. Wang, Sun Ling & Huang, Jikun & Wang, Xiaobing & Tuan, Francis, 2019. "Are China’s regional agricultural productivities converging: How and why?," Food Policy, Elsevier, vol. 86(C), pages 1-1.
    5. Roberto ESPOSTI, 2007. "On the Decline of Agriculture. Evidence from Italian Regions in the Post-WWII Period," Working Papers 300, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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    More about this item

    Keywords

    Taiwan; productivity growth; GDP function; error correction;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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