Agricultural Productivity, Trade, and Industrialisation.

Traditional development economics states that industrialization must be positively correlated with agricultural development as in the American and many European cases. However, some recent industrialization experiences suggests a negative link which can be supported by a simple Ricardian argument. Yet this argument is not consistent with the agricultural 'leap forward' that often occurred before industrialization took place. Here, the author develops a model in which, for a closed economy, industrialization follows rising agricultural productivity. For a small open economy, multiple equilibria are possible and industrialization tends to be associated with low agricultural productivity but is triggered by sudden changes in it. Copyright 1998 by Royal Economic Society.