Agricultural policies, Engel's law and the development of agriculture in fast-growing economies of Asia

This dissertation analyzes how the relative economic importance of the agricultural sector in a growing economy is determined by factors associated with economic development. The main questions addressed are: (i) How is agriculture's share related to real per capita GDP level, and does agriculture's share decline at approximately the same rate in all economies at a similar stage of development? (ii) Do policies appear to have made a difference in agricultural development? and (iii) What role does international trade play in the process?We develop a two-sector general equilibrium model and explain the mechanisms through which both economic and political factors affect the evolution of agriculture's relative importance in the context of economic growth. We conduct a simulation analysis to investigate the hypothesis that growth-induced agricultural support policies can generate positive economic effects that will prevent or reduce agriculture's relative decline with economic growth. The results of various policy scenarios support our hypothesis.The analysis is taken further by estimating the effects of a number of factors on agriculture's relative importance using data for six fast-growing Asian economies: Japan, South Korea, Taiwan, Thailand, Malaysia, and Indonesia over the period 1955--96. A simultaneous equations model is estimated that explicitly takes into account the effect of endogenously determined agricultural protection. The results show that agriculture's GDP (and labor) share is a function of the real per capita GDP level, and confirm a relative decline in agriculture with economic growth. The hypothesis that agriculture's relative decline is not inevitable is also confirmed by the estimation results.We find that agriculture's GDP (and labor) share declines at varying rates among six Asian economies at a similar stage of development before reaching a real per capita GDP level of...