Martin Andersson

Senior lecturer

The Revival of Agriculture and Inclusive Growth during the Commodity Boom in Latin America?

Author

Martin Andersson
Andrés Palacio

Summary, in English

Latin America has constituted a recent example of inclusive growth by reducing poverty
and income inequality simultaneously during the latest commodity boom. Against the
backdrop of non-inclusive and non-transformative nature of commodity booms, we ask
whether growth of agriculture was able to speed up structural transformation, and,
relatedly, if agricultural growth was inclusive. We examine 16 countries for the period
1994-2014 and find that the increase in agricultural productivity is associated with an
increase in both non-agricultural employment during the boom. We also find that income
per capita growth has been increasing also among the poor, even if the income elasticities
are lower in rural than in urban areas. Focusing on the distribution of agricultural income in
Brazil and Colombia between 2003 and 2013, we find that any improvement did go through
income for the bottom and the intermediate deciles. Furthermore, formal employment was
positively connected to the development of agricultural prices, income improvement of the
bottom 40 per cent and the quality of manufacturing exports. In other words, the
commodity boom, through agricultural growth, increased linkages across sectors. We
conclude that the boom is associated with advances in structural change and moderate
inclusive growth rather than mere redistribution.

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