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Economic Growth, Size of the Agricultural Sector, and Urbanization

Author

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  • Markus Bruckner

    (School of Economics, University of Adelaide)

Abstract

This paper exploits the significant positive response of the share of agricultural value added and GDP per capita growth to variations in the international prices for agricultural commodities and rainfall to construct instrumental variables estimates of the causal effect that changes in the size of the agricultural sector and GDP per capita growth have on the urbanization rate for a panel of 41 African countries during the period 1960-2007. The paper's two main findings are that: (i) decreases in the share of agricultural value added lead to a significant increase in the urbanization rate; (ii) conditional on changes in the share of agricultural value added GDP per capita growth does not significantly affect the urbanization rate. The empirical results confirm the predictions of theoretical models that economic shocks which differentially affect the return across sectors matter for the rural-urban migration decision, and that economic growth mostly affects the urbanization rate through a sector shift out of agriculture.

Suggested Citation

  • Markus Bruckner, 2011. "Economic Growth, Size of the Agricultural Sector, and Urbanization," School of Economics and Public Policy Working Papers 2011-16, University of Adelaide, School of Economics and Public Policy.
    • Handle: RePEc:adl:wpaper:2011-16
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    File URL: https://media.adelaide.edu.au/economics/papers/doc/wp2011-16.pdf
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    References listed on IDEAS

    as
    1. Markus Brückner & Antonio Ciccone, 2010. "International Commodity Prices, Growth and the Outbreak of Civil War in Sub-Saharan Africa," Economic Journal, Royal Economic Society, vol. 120(544), pages 519-534, May.
    2. Markus Brückner, 2013. "On the simultaneity problem in the aid and growth debate," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 126-150, January.
    3. Markus Bruckner & Antonio Ciccone, 2010. "International Commodities Prices, Growth and the Outbreak of Civil War in Sub-Saharan Africa," Working Papers 1008, BBVA Bank, Economic Research Department.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Markus Brueckner & Hannes Schwandt, 2015. "Income and Population Growth," Economic Journal, Royal Economic Society, vol. 125(589), pages 1653-1676, December.
    2. Jean-François Brun & Maïmouna Diakite, 2016. "Tax Potential and Tax Effort: An Empirical Estimation for Non-resource Tax Revenue and VAT’s Revenue," Working Papers halshs-01332053, HAL.
    3. Samuel Guérineau & Relwende Sawadogo, 2015. "On the determinants of life insurance development in Sub-Saharan Africa: the role of the institutions quality in the effect of economic development," CERDI Working papers halshs-01178838, HAL.

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    More about this item

    Keywords

    economic growth; sectoral shocks; urbanization;
    All these keywords.

    JEL classification:

    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General

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