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Title: Agricultural Diversification and Economic Development: Evidence from U.S. History
Citation Type: Miscellaneous
Publication Year: 2014
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Abstract: Theories concerning the relationship between economic diversification and growth generate contrasting implications, while empirical studies have been unable to pro- vide conclusive evidence. This paper examines the role of agricultural diversification in the process of development. Evidence from U.S. counties shows that patterns of agricultural production at early stages of development affected structural change and long-run economic performance. Using a novel instrumental variable strategy, which relies on exogenous variation in agricultural diversification generated by natural en- dowments, I show that a one-standard-deviation increase in agricultural diversifica- tion in the mid-19th century led to gains of around 5% in income per capita levels in recent decades. Moreover, the positive effects of diversification can be traced back to the relative size and productivity of the manufacturing sector in the early 20th century, which shows that agricultural diversification affected the industrialization process over the Second Industrial Revolution (1860-1920). An assessment of mech- anisms suggests that the long-term effects of agricultural diversification operated through industrial diversification and human capital formation.
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Authors: Fiszbein, Martin
Publisher: Brown University, Department of Economics
Data Collections: IPUMS NHGIS
Topics: Land Use/Urban Organization, Other
Countries: United States