IDEAS home Printed from https://ideas.repec.org/a/eee/jfpoli/v109y2022ics0306919222000331.html
   My bibliography  Save this article

Prioritizing public investment in agriculture for post-COVID-19 recovery: A sectoral ranking for Mexico

Author

Listed:
  • Sánchez, Marco V.
  • Cicowiez, Martín
  • Ortega, Araceli

Abstract

Mexico's economy contracted unprecedentedly in 2020. Agriculture remains important for the economy and job creation, but it lacks strong productive dynamism and exhibits high informality. We show that investing in agriculture’s infrastructure can contribute to economic recovery and welfare post-COVID-19. On the basis of a dynamic computable general equilibrium model, we allocate to agriculture sectors public investment in productive infrastructure equivalent to 0.25% of GDP during three immediate years and analyze effects up to 2030. We see improvement in GDP, agri-food output and private consumption with rural poverty reduction. Based on the impact on these variables, a ranking suggests that new investments should prioritize the sugar cane sector. Highly ranked are also cereals, mainly maize, and other export-oriented crops such as flowers and coffee. Not only should investments prioritize these sectors, but the government should also finance them with foreign borrowing to speed up recovery and avert the short-term macroeconomic trade-offs of domestic financing.

Suggested Citation

  • Sánchez, Marco V. & Cicowiez, Martín & Ortega, Araceli, 2022. "Prioritizing public investment in agriculture for post-COVID-19 recovery: A sectoral ranking for Mexico," Food Policy, Elsevier, vol. 109(C).
    • Handle: RePEc:eee:jfpoli:v:109:y:2022:i:c:s0306919222000331
    DOI: 10.1016/j.foodpol.2022.102251
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306919222000331
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.foodpol.2022.102251?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dessus, Sebastien & Herrera, Remy, 2000. "Public Capital and Growth Revisited: A Panel Data Assessment," Economic Development and Cultural Change, University of Chicago Press, vol. 48(2), pages 407-418, January.
    2. Banerjee, Onil & Cicowiez, Martin & Moreda, Adela, 2019. "Evaluating the Economic Viability of Public Investments in Tourism," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 11(1), pages 101-130, November.
    3. Sánchez, Marco V. & Cicowiez, Martín, 2014. "Trade-offs and Payoffs of Investing in Human Development," World Development, Elsevier, vol. 62(C), pages 14-29.
    4. Cicowiez,Martin & Lofgren,Hans & Cicowiez,Martin & Lofgren,Hans, 2017. "A GEM for streamlined dynamic CGE analysis : structure, interface, data, and macro application," Policy Research Working Paper Series 8272, The World Bank.
    5. Robinson, Sherman, 1989. "Multisectoral models," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 18, pages 885-947, Elsevier.
    6. Gupta, Sanjeev & Kangur, Alvar & Papageorgiou, Chris & Wane, Abdoul, 2014. "Efficiency-Adjusted Public Capital and Growth," World Development, Elsevier, vol. 57(C), pages 164-178.
    7. Marco V. Sánchez & Rob Vos & Enrique Ganuza & Hans Lofgren & Carolina Díaz-Bonilla (ed.), 2010. "Public Policies for Human Development," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-27757-1.
    8. Manning, Dale T. & Taylor, J. Edward, 2015. "Agricultural Efficiency and Labor Supply to Common Property Resource Collection: Lessons from Rural Mexico," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(3), pages 1-22, September.
    9. Matt Lowe & Chris Papageorgiou & Fidel Perez‐Sebastian, 2019. "The Public and Private Marginal Product of Capital," Economica, London School of Economics and Political Science, vol. 86(342), pages 336-361, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Henri E. Z. Tonnang & Bonoukpoè Mawuko Sokame & Mark Wamalwa & Saliou Niassy & Beatrice Wambui Muriithi, 2023. "System Dynamics Modeling for Assessing the Impact of COVID-19 on Food Supply Chains: A Case Study of Kenya and Rwanda," Sustainability, MDPI, vol. 15(6), pages 1-19, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sánchez Cantillo, Marco Vinicio, 2015. "Macroeconomic trade-offs and external vulnerabilities of human development in Nicaragua," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    2. Tamai, Toshiki, 2023. "The rate of discount on public investments with future bias in an altruistic overlapping generations model," European Journal of Political Economy, Elsevier, vol. 79(C).
    3. Giovanni Ganelli & Juha Tervala, 2020. "Welfare Multiplier of Public Investment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(2), pages 390-420, June.
    4. Matt Lowe & Chris Papageorgiou & Fidel Perez‐Sebastian, 2019. "The Public and Private Marginal Product of Capital," Economica, London School of Economics and Political Science, vol. 86(342), pages 336-361, April.
    5. Muhammad Javid, 2019. "Public and Private Infrastructure Investment and Economic Growth in Pakistan: An Aggregate and Disaggregate Analysis," Sustainability, MDPI, vol. 11(12), pages 1-22, June.
    6. Lofgren, Hans & Cicowiez, Martin, 2021. "Infrastructure in CGE models: Alternative formulations, empirical evidence, and a new approach," Conference papers 333280, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Matthew Lowe & Chris Papageorgiou & Fidel Perez-Sebastian, 2012. "The Public and Private MPK," DEGIT Conference Papers c017_021, DEGIT, Dynamics, Economic Growth, and International Trade.
    8. Hüther Michael & Südekum Jens, 2019. "Die Schuldenbremse – eine falsche Fiskalregel am falschen Platz," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 20(4), pages 284-291, December.
    9. Hüther, Michael, 2019. "10 Jahre Schuldenbremse: Ein Konzept mit Zukunft?," IW policy papers 3/2019, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    10. Sánchez, Marco V. & Cicowiez, Martín, 2023. "Optimal allocation of agriculture’s public budget can improve transformation and healthy diets access in Ethiopia," Journal of Policy Modeling, Elsevier, vol. 45(6), pages 1262-1280.
    11. Hans Pitlik & Michael Klien & Stefan Schiman-Vukan, 2017. "Stabilitätskonforme Berücksichtigung nachhaltiger öffentlicher Investitionen," WIFO Studies, WIFO, number 60595, January.
    12. Glomsrod, Solveig & Taoyuan, Wei, 2005. "Coal cleaning: a viable strategy for reduced carbon emissions and improved environment in China?," Energy Policy, Elsevier, vol. 33(4), pages 525-542, March.
    13. Harouna Sedgo & Luc Désiré Omgba, 2023. "Corruption and distortion of public expenditures: evidence from Africa," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(2), pages 419-452, April.
    14. Lewis, Jeffrey D. & Robinson, Sherman & Wang, Zhi, 1995. "Beyond the Uruguay Round: The implications of an Asian free trade area," China Economic Review, Elsevier, vol. 6(1), pages 35-90.
    15. Adams, Philip D. & Dixon, Peter B., 1997. "Generating detailed commodity forecasts from a computable general equilibrium model," International Journal of Forecasting, Elsevier, vol. 13(2), pages 223-236, June.
    16. Firew B Woldeyes, 2013. "Long-Run Effects of Resource Rents in Developing Countries: The role of public investment management," OxCarre Working Papers 105, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    17. Carranza-Ugarte, Luis & Díaz-Saavedra, Julián & Galdon-Sanchez, Jose Enrique, 2023. "Rethinking fiscal rules," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 833-857.
      • Luis Carranza Ugarte & Julian Diaz Saavedra & Jose Enrique Galdon-Sanchez, 2021. "Rethinking fiscal rules," ThE Papers 21/14, Department of Economic Theory and Economic History of the University of Granada..
    18. Robinson, Sherman & Yunez-Naude, Antonio & Hinojosa-Ojeda, Raul & Lewis, Jeffrey D. & Devarajan, Shantayanan, 1999. "From stylized to applied models:: Building multisector CGE models for policy analysis," The North American Journal of Economics and Finance, Elsevier, vol. 10(1), pages 5-38.
    19. Diagne, Youssoupha Sakrya & Sy, Hamat & Thiam, Dame, 2014. "Efficience des dépenses publiques au Sénégal [Public spending efficiency in Senegal]," MPRA Paper 113994, University Library of Munich, Germany.
    20. Theodore Kahn & Zack Zimbalist, 2022. "Public investment versus government consumption: how FDI shocks shape the composition of subnational spending in Mexico," Review of International Political Economy, Taylor & Francis Journals, vol. 29(2), pages 502-537, March.

    More about this item

    Keywords

    Computable general equilibrium; Public investment; Agriculture; Mexico; Agricultural policy;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jfpoli:v:109:y:2022:i:c:s0306919222000331. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/foodpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.