Mathew Shane

Competitiveness of U.S. Food Processing: Benefits from Primary Agriculture

High-value agricultural products such as processed foods are becoming increasingly important for both the production and trade of the United States. Efficiency gains in primary agriculture may be transferred to the processed food sector in the form of cheaper inputs because price declines and productivity growth have been coincidental in agriculture. In turn, efficiency gains in the processed food sector are transferred, in part, back to primary agriculture by increasing the derived demand and, thus, mitigating the decline in the latters price. Efficiency gains are relatively more important in primary agriculture than in food processing. Policies which encourage productivity growth that lowers the production costs can increase the competitiveness of both sectors. The ultimate beneficiaries of the price declines in primary agriculture and food processing are consumers. Copyright 1996, Oxford University Press.

Exchange Rates, Foreign Income, and U.S. Agricultural Exports

While it is generally accepted that change in the real value of the dollar is an important determinant of exports, it has not been rigorously demonstrated that this relationship, derivable from theory, holds empirically for agricultural exports and the components of agricultural exports. Starting with a dynamic maximizing framework, this paper estimates the real trade-weighted exchange rate and trade partner income effects on U. S. agricultural exports. For the period 1970–2006, a one percent annual increase in trade partners’ income is found to increase total agricultural exports by about 0. 75 percent, while a one percent appreciation of the dollar relative to trade partner trade-weighted currencies decreases total agricultural exports by about 0. 5 percent. While these effects carry over to 12 commodity subcategories, they are conditioned by differences between bulk and high value commodities, and differences in the export demand from high compared to low income countries. We use a directed acyclic graphs (DAG) technique to identify the inverted fork causal relationships from vector autoregression (VAR) models. We also find that there is an asymmetric exchange rate effect so that the negative effect of exchange rate appreciation on exports sometimes dominates the positive effect of foreign income growth.

Agricultural competitiveness: The case of the United States and major EU countries☆

Growth in the agricultural GDP of four major European countries is compared with US agricultural growth for the period 1974-1993. The agricultural sectors relative prices are taken into account along with economy-wide factor market adjustments. For Denmark, France, Germany and the UK, the effects of declining real prices and changes in input levels on growth in agricultural GDP are relatively small. Total Factor Productivity (TFP) growth appears to be the major contributor to European agricultural GDP growth. In comparison, TFP is the major source of growth in US agricultural GDP, but its rate of growth is lower than the European countries. In contrast, the declining real prices for US agriculture had a relatively large effect on its GDP. However, in recent years, the effects of declining real prices and declining rates of growth in TFP on European agriculture are relatively large. In the longer-run, the relative competitiveness of US agriculture is largely dependent on its ability to sustain and increase growth in TFP.

China: A Study of Dynamic Growth

Chinas rapid economic growth has been driven by high rates of investment, gains in productivity, and liberalized foreign trade and investment. Chinas growth is likely to continue, but the Chinese economy faces some possibly unsustainable pressures.