STEG Working Paper

Trade, Technology, and Agricultural Productivity

Farid Farrokhi and Heitor S. Pellegrina

We examine the contribution of trade to the rise of modern agriculture, taking into account interactions between trade, input requirements, and technology adoption. We develop and estimate a new multi-country general equilibrium model that incorporates producers' choices of which crops to produce and with which technologies, at the level of grid-cells covering the Earth's surface. We find that trade cost reductions in agricul-tural inputs and the international transmission of productivity growth in the agricul-tural input sector since the 1980s induced large shifts from traditional, labor-intensive technologies to modern, input-intensive ones, with important global and distributional implications for productivity and welfare.