The impact of trade and policy liberalization on Argentina's agricultural sector: technology adoption in a dynamic model
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This dissertation analyzes the effect of policies associated with increased openness of the economy on the development of the agricultural sector, with a focus on adoption of technology. It investigates with the help of econometric tools the determinants of the adoption of technology in Argentina. In addition, it analyzes the possible growth paths that result with the implementation of policies using a recursive dynamic Computable General Equilibrium (CGE) model. During the last 20 years Argentina experienced extraordinary changes in its agricultural production. Both production and productivity increased very significantly as well as exports. One of the main drivers of these changes was the massive incorporation of technological change such as improved seeds, greater use of agrochemicals and machinery and agronomic technologies such as zero tillage. This study analyzes the impact of the economic environment on the adoption of technology. The results confirm the argument that the stability of the economy and liberalization motivates producers to adopt new technology. This motivation can be the consequence of the need to adopt new technology because otherwise producers lose competitiveness in the world market and/or because the stability and transparency of the economy makes producers more comfortable with the idea of innovation. The second major element of the research is the analysis of the impacts that the possible trade agreements that the Argentine government is involved right now, one representing free trade world wide (WTO) and the other a Western hemisphere free trade bloc (FTAA), could have on agriculture. The results leave us with the idea that for the agricultural sector it is worth pushing for the full implementation of free trade in the world rather than trying to only go forward with a regional free trade agreement. However, this is only true if there is a significant progress in reducing trade barriers and producers subsidies in developed countries. Otherwise the idea of only eliminating trade barriers between the FTAA bloc sounds very appealing with the gains that Argentina can take by better access to a larger market and the increase in bargaining power with outsiders of the bloc.