INTERNATIONAL TRADE, AGRICULTURAL PRODUCTIVITY AND POVERTY: THE ROLE OF PRODUCT TRADABILITY IN THE CHILEAN CASE

Open Access
Author:
Fleming, David Alexander
Graduate Program:
Agricultural Economics
Degree:
Master of Science
Document Type:
Master Thesis
Date of Defense:
June 20, 2008
Committee Members:
  • David Gerard Abler, Dissertation Advisor
  • David Gerard Abler, Thesis Advisor
Keywords:
  • agricultural productivity
  • international trade
  • poverty
Abstract:
Globalization is an issue that during the last two decades has been a major topic of discussion by different actors in society. Questions have arisen about the impacts that an open economy has on the agriculture and poverty of developing countries. Is the internationalization of agriculture improving the efficiency of farmers in poor regions through international transfers and spillovers of technology and knowledge? Are local producers better off as a result of agricultural trade liberalization? Is poverty being affected by the internationalization of agriculture? This study attempts in some degree to answer these questions through the creation and analysis of an agricultural tradability index (TI), which measures the degree to which a country or an individual farm produces commodities that are internationally traded as opposed to commodities for which international trade is small. Using data from Chile three analyses are undertaken. First, a TI at the national level is constructed for 37 traditional and non-traditional crops, and its impact on corresponding yields for these crops is analyzed for the period 1991-2005. Results show that the TI is positively correlated with growth in crop yields. Second, the role of the TI at the farm level is analyzed. Using farm-level data from the 1997 Chilean agricultural census, a cross-sectional regression is used to evaluate the role that international agricultural trade—measured by the farm-level TI—has on yields of traditional crops (grains and beans are the main crops in the census for which farm-level yields are reported). In order to consider the trade structure of agriculture in Chile, this analysis is performed on two different groups of farms: 1) farms that produce exclusively traditional crops, which are heavily influenced by import trends; and 2) farms that in addition to producing traditional staples also produce non-traditional crops (especially fruits), which are more heavily exported. An endogenous switching regression model is used to predict which farms produce only traditional crops versus those that produce both traditional and non-traditional crops. The results indicate that, in general, farms with a higher TI have higher yields. Also, comparing the two groups of farms, those producing both traditional and non-traditional crops have a larger coefficient for the TI variable than farms producing only traditional crops. Third, the role of the TI at the community level is analyzed. Using data from different sources, a cross-sectional regression is done to evaluate the role that international agricultural trade—measured by the community-level TI—has on the poverty rate reported in Chilean communities. Including variables controlling for spatial dependence on poverty presence, results indicate that in general communities with a higher TI have less poverty.