hanging Comparative Advantage in Agriculture: Theory and Pacific Basin Experience

While agriculture's contribution to national output and employment tends to decline with economic growth, its contribution to exports may not. Rather, a country's comparative advantage in agriculture is shown to depend positively on its endowment of agricultural land relative to its mineral resources and non­farm capital and negatively on its income per hectare of agricultural land, com­pared with other countries. Over time, its agricultural comparative advantage will decline faster, the slower its rate of agricultural relative to nonagricultural technological change and the faster its rate of industrial growth, compared with these rates in other countries. The implications of this empricially-supported theory for Australia and other Pacific rim countries are then discussed along with some policy implications, particularly for the densely-populated, rapidly­ industrializing economies of South Korea and Taiwan.