Agricultural exports and agricultural economic growth in developed countries: Evidence from OECD countries

Abstract

This study examines the validity of the export-led growth hypothesis in the context of developed countries’ agricultural sector, considering the existence of a common market among countries. Using the annual data of Organisation for Economic Co-operation and Development (OECD) countries from 1997 to 2016, we analyze the effect of agricultural exports on agricultural growth. For the comparison between developed countries with and without common markets, we create three subsamples (OECD, the European Union [EU] countries among OECD members, and the non-EU countries among OECD members). Estimation results show that agricultural exports (imports) have a positive (negative) effect on agricultural growth only in the case of the EU subsample. These results imply that access to foreign markets is important to validate the export-led growth hypothesis in the agricultural sector of developed countries.

KEYWORDS:

• Agricultural export
• agricultural growth
• common market
• developed countries

JEL CLASSIFICATIONS:

• O13
• O1
• O
• Q17
• Q1
• Q
• C22
• C2
• C

Acknowledgements

This research is a modified version of the report entitled 'The Impact of Agricultural Export on the Agricultural Growth in Developed Countries (No. W48)' that was published by Korea Rural Economic Institute in 2019.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 https://data.worldbank.org/indicator/NV.AGR.TOTL.ZS

2 Due to data availability, the other seven OECD members (Belgium, Canada, Colombia, Czech Republic, Luxembourg, Slovak Republic, and Slovenia) are not included in our dataset.

3 Instead of the dynamic common-correlated effects model, we adopt the common-correlated effect model as all variables are stationary in both the total sample and subsamples.

4 As Kang (2015) shows possible heterogeneities in the impact of production factors on economic growth across countries, our EU subsample comprises 18 OECD members that are at different stages of economic development.

5 This can also be explained by the characteristics of agricultural products. Agricultural goods are mostly perishable and agricultural demand in a country is not easily expandable because of the limitation in intake of food per capita. In turn, supply changes through more liberalized trade are expected to have huge impacts on the domestic prices of agricultural products.

Additional information

Funding

This work was supported by Korea Rural Economic Institute: [Grant Number No. W48].