IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/14616.html
   My bibliography  Save this book chapter

Global Agricultural Value Chains and Structural Transformation

In: Risks in Agricultural Supply Chains

Author

Listed:
  • Sunghun Lim

Abstract

Can modern-day developing economies transform their economies by participating in global value chains (GVCs)? The rise of global value chains (GVCs) has changed the nature of production around the world over recent years. Conventionally, companies used to produce goods primarily in one country. That has all changed. Modern-day, a single finished product often results from manufacturing and assembly in multiple countries, with each step in the process adding value to the final product. Although the transition out-of-agriculture is an important aspect of economic development in developing countries, it is unclear whether participation in global value chains (GVCs) fosters a structural transformation ─ the process whereby economic activity is reallocated from agriculture to manufacturing, and then from manufacturing to the services sector. In this paper, I investigate the effect of the participation in agricultural GVCs on the structural transformation. Using multi-region input-output data to measure GVC participation and crosscountry data for 183 countries for the period 1990-2013. I find that in response to greater agri-food global value-chain participation, modern-day agrarian economies are leapfrogging manufacturing to directly develop their services sector, which runs counter to conventional structural transformation narratives. This result is strongly robust to (i) various alternative specifications (i.e., regional-year fixed effects, a linear time trend, country-specific time trends, regional-specific time trends, all along with country fixed effects and country-specific year fixed effects), (ii) an alternative measure of structural transformation (GDP and employment shares), and (iii) an alternative measure of GVCs. By slicing the data, I also find that the move of structural transformation is statistically unclear in low-income countries. This is important for agri-food industrial, trade, and development policy by providing original evidence that believing in
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Sunghun Lim, 2021. "Global Agricultural Value Chains and Structural Transformation," NBER Chapters, in: Risks in Agricultural Supply Chains, pages 29-57, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14616
    as

    Download full text from publisher

    File URL: http://www.nber.org/chapters/c14616.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, vol. 104(2), pages 459-494, February.
    2. Margarida Duarte & Diego Restuccia, 2010. "The Role of the Structural Transformation in Aggregate Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 129-173.
    3. Viktoria Hnatkovska & Amartya Lahiri & Carlos A. Vegh, 2016. "The Exchange Rate Response to Monetary Policy Innovations," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(2), pages 137-181, April.
    4. Alberto Abadie & Susan Athey & Guido W Imbens & Jeffrey M Wooldridge, 2023. "When Should You Adjust Standard Errors for Clustering?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(1), pages 1-35.
    5. Antràs, Pol & de Gortari, Alonso & Itskhoki, Oleg, 2017. "Globalization, inequality and welfare," Journal of International Economics, Elsevier, vol. 108(C), pages 387-412.
    6. Gaaitzen de Vries & Marcel Timmer & Klaas de Vries, 2015. "Structural Transformation in Africa: Static Gains, Dynamic Losses," Journal of Development Studies, Taylor & Francis Journals, vol. 51(6), pages 674-688, June.
    7. Francisco Alvarez-Cuadrado & Markus Poschke, 2011. "Structural Change Out of Agriculture: Labor Push versus Labor Pull," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(3), pages 127-158, July.
    8. Hendrik Feyaerts & Goedele Van den Broeck & Miet Maertens, 2020. "Global and local food value chains in Africa: A review," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 143-157, January.
    9. Antrà s, Pol & Chor, Davin, 2017. "On the Measurement of Upstreamness and Downstreamness in Global Value Chains," CEPR Discussion Papers 12549, C.E.P.R. Discussion Papers.
    10. C. Peter Timmer, 2009. "A World Without Agriculture: The Structural Transformation in Historical Perspective," Books, American Enterprise Institute, number 43120, September.
    11. Richard J. Sexton, 2013. "Market Power, Misconceptions, and Modern Agricultural Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 209-219.
    12. Ian M Sheldon & Daniel C K Chow & William McGuire, 2018. "Trade Liberalization and Constraints on Moves to Protectionism: Multilateralism vs. Regionalism," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(5), pages 1375-1390.
    13. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
    14. Paula Bustos & Bruno Caprettini & Jacopo Ponticelli, 2016. "Agricultural Productivity and Structural Transformation: Evidence from Brazil," American Economic Review, American Economic Association, vol. 106(6), pages 1320-1365, June.
    15. Richard Rogerson, 2008. "Structural Transformation and the Deterioration of European Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(2), pages 235-259, April.
    16. Guy Michaels & Ferdinand Rauch & Stephen J. Redding, 2012. "Urbanization and Structural Transformation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(2), pages 535-586.
    17. J. Steven Landefeld & Eugene P. Seskin & Barbara M. Fraumeni, 2008. "Taking the Pulse of the Economy: Measuring GDP," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 193-216, Spring.
    18. Belotti,Federico & Borin,Alessandro & Mancini,Michele, 2020. "icio : Economic Analysis with Inter-Country Input-Output Tables in Stata," Policy Research Working Paper Series 9156, The World Bank.
    19. Syrquin, Moshe, 1988. "Patterns of structural change," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 7, pages 203-273, Elsevier.
    20. Minten, Bart & Randrianarison, Lalaina & Swinnen, Johan F.M., 2009. "Global Retail Chains and Poor Farmers: Evidence from Madagascar," World Development, Elsevier, vol. 37(11), pages 1728-1741, November.
    21. repec:aei:rpbook:24862 is not listed on IDEAS
    22. Bart Los & Marcel P. Timmer, 2020. "Measuring Bilateral Exports of Value Added: A Unified Framework," NBER Chapters, in: Challenges of Globalization in the Measurement of National Accounts, pages 389-421, National Bureau of Economic Research, Inc.
    23. Shantayanan Devarajan, 2013. "Africa's Statistical Tragedy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59, pages 9-15, October.
    24. Alessandro Borin & Michele Mancini, 2019. "Measuring What Matters in Global Value Chains and Value-Added Trade," World Bank Publications - Reports 31533, The World Bank Group.
    25. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    26. Dani Rodrik, 2016. "Premature deindustrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 1-33, March.
    27. Bellemare, Marc F., 2012. "As You Sow, So Shall You Reap: The Welfare Impacts of Contract Farming," World Development, Elsevier, vol. 40(7), pages 1418-1434.
    28. Montalbano, P. & Pietrelli, R. & Salvatici, L., 2018. "Participation in the market chain and food security: The case of the Ugandan maize farmers," Food Policy, Elsevier, vol. 76(C), pages 81-98.
    29. Mergenthaler, Marcus & Weinberger, Katinka & Qaim, Matin, 2009. "The food system transformation in developing countries: A disaggregate demand analysis for fruits and vegetables in Vietnam," Food Policy, Elsevier, vol. 34(5), pages 426-436, October.
    30. Zhi Wang & Shang-Jin Wei & Xinding Yu & Kunfu Zhu, 2017. "Measures of Participation in Global Value Chains and Global Business Cycles," NBER Working Papers 23222, National Bureau of Economic Research, Inc.
    31. Morten Jerven & Deborah Johnston, 2015. "Statistical Tragedy in Africa? Evaluating the Data Base for African Economic Development," Journal of Development Studies, Taylor & Francis Journals, vol. 51(2), pages 111-115, February.
    32. Robert C. Johnson & Guillermo Noguera, 2012. "Proximity and Production Fragmentation," American Economic Review, American Economic Association, vol. 102(3), pages 407-411, May.
    33. Cattaneo, O. & Gereffi, G. & Miroudot, S. & Taglioni, D., 2013. "Joining, upgrading and being competitive in global value chains : a strategic framework," Policy Research Working Paper Series 6406, The World Bank.
    34. Del Prete, Davide & Giovannetti, Giorgia & Marvasi, Enrico, 2018. "Global value chains: New evidence for North Africa," International Economics, Elsevier, vol. 153(C), pages 42-54.
    35. Reardon, Thomas & Barrett, Christopher B. & Berdegué, Julio A. & Swinnen, Johan F.M., 2009. "Agrifood Industry Transformation and Small Farmers in Developing Countries," World Development, Elsevier, vol. 37(11), pages 1717-1727, November.
    36. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    37. Reardon, Thomas & Timmer, C. Peter, 2007. "Transformation of Markets for Agricultural Output in Developing Countries Since 1950: How Has Thinking Changed?," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 55, pages 2807-2855, Elsevier.
    38. Jean Balié & Davide Del Prete & Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2019. "Does Trade Policy Impact Food and Agriculture Global Value Chain Participation of Sub-Saharan African Countries?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(3), pages 773-789.
    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. Ahn, Soojung & Steinbach, Sandro, 2022. "COVID-19 Trade Actions and Their Impact on the Agricultural and Food Sector," 2022 Allied Social Sciences Association (ASSA) Annual Meeting (Virtual), January 7-9, 2022 316789, Agricultural and Applied Economics Association.
    2. Soojung Ahn & Sandro Steinbach, 2023. "The impact of COVID‐19 trade measures on agricultural and food trade," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(2), pages 911-927, June.
    3. Bangkit A. Wiryawan & Christian Otchia, 2022. "The legacy of the reformasi: the role of local government spending on industrial development in a decentralized Indonesia," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-19, December.
    4. Bellemare, Marc F., 2022. "Agricultural value chains: towards a marriage of development economics and industrial organisation?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(02), January.

    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. Jean Baliè & Davide Del Prete & Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2017. "Agriculture and Food Global Value Chains in Sub-Saharan Africa: Does bilateral trade policy impact on backward and forward participation?," Working Papers 03/2017, IMT School for Advanced Studies Lucca, revised Feb 2017.
    2. Nenci, Silvia & Fusacchia, Ilaria & Giunta, Anna & Montalbano, Pierluigi & Pietrobelli, Carlo, 2022. "Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2), July.
    3. Montalbano, Pierluigi & Nenci, Silvia, 2022. "Does global value chain participation and positioning in the agriculture and food sectors affect economic performance? A global assessment," Food Policy, Elsevier, vol. 108(C).
    4. Luca Salvatici & Silvia Nenci, 2017. "New features, forgotten costs and counterfactual gains of the international trading system," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(4), pages 592-633.
    5. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941, Elsevier.
    6. Stefan Pahl & Marcel P. Timmer, 2020. "Do Global Value Chains Enhance Economic Upgrading? A Long View," Journal of Development Studies, Taylor & Francis Journals, vol. 56(9), pages 1683-1705, July.
    7. Johan Swinnen & Alessandro Olper & Senne Vandevelde, 2021. "From unfair prices to unfair trading practices: Political economy, value chains and 21st century agri‐food policy," Agricultural Economics, International Association of Agricultural Economists, vol. 52(5), pages 771-788, September.
    8. Montalbano, P. & Pietrelli, R. & Salvatici, L., 2018. "Participation in the market chain and food security: The case of the Ugandan maize farmers," Food Policy, Elsevier, vol. 76(C), pages 81-98.
    9. Ilaria Fusacchia, 2020. "Evaluating the Impact of the US–China Trade War on Euro Area Economies: A Tale of Global Value Chains," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(3), pages 441-468, November.
    10. repec:oup:apecpp:v:40:y:2018:i:3:p:379-401. is not listed on IDEAS
    11. Rohit, Kumar, 2023. "Global value chains and structural transformation: Evidence from the developing world," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 285-299.
    12. Roman Stöllinger, 2017. "Global Value Chains and Structural Upgrading," wiiw Working Papers 138, The Vienna Institute for International Economic Studies, wiiw.
    13. Xinshen Diao & Kenneth Harttgen & Margaret McMillan, 2017. "The Changing Structure of Africa’s Economies," The World Bank Economic Review, World Bank, vol. 31(2), pages 412-433.
    14. Asanka Wijesinghe & Chathurrdhika Yogarajah, 2022. "Trade Policy Impact on Global Value Chain Participation of the South Asian Countries," Journal of Asian Economic Integration, , vol. 4(1), pages 24-48, April.
    15. Choorikkad Veeramani & Garima Dhir, 2022. "Do developing countries gain by participating in global value chains? Evidence from India," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(4), pages 1011-1042, November.
    16. Gangopadhyay, Kausik & Mondal, Debasis, 2021. "Productivity, relative sectoral prices, and total factor productivity: Theory and evidence," Economic Modelling, Elsevier, vol. 100(C).
    17. Ilaria Fusacchia & Jean Balié & Luca Salvatici, 2022. "The AfCFTA impact on agricultural and food trade: a value added perspective," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(1), pages 237-284.
    18. Carlo Altomonte & Laura Bonacorsi & Italo Colantobe, 2018. "Trade and Growth in the Age of Global Value Chains," BAFFI CAREFIN Working Papers 1897, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    19. Biswajit Banerjee & Juraj Zeman, 2022. "Determinants of global value chain participation: cross-country analysis," Indian Economic Review, Springer, vol. 57(1), pages 59-95, June.
    20. Anja Slany, 2019. "The Role of Trade Policies in Building Regional Value Chains – Some Preliminary Evidence From Africa," South African Journal of Economics, Economic Society of South Africa, vol. 87(3), pages 326-353, September.
    21. Swinnen, Johan & Kuijpers, Rob, 2019. "Value chain innovations for technology transfer in developing and emerging economies: Conceptual issues, typology, and policy implications," Food Policy, Elsevier, vol. 83(C), pages 298-309.

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

    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:nbr:nberch:14616. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    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.