The most important economic event of the past century

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We estimate the impact of the Green Revolution in the developing world by exploiting exogenous heterogeneity in the timing and extent of the benefits derived from high-yielding crop varieties (HYVs).

HYVs increased yields of food crops by 44 percent between 1965 and 2010. The total effect on yields is even higher because of substitution towards crops for which HYVs were available, and because of reallocation of land and labor.

Beyond agriculture, our baseline estimates show strong, positive, and robust impacts of the Green Revolution on different measures of economic development. Most striking is the impact on GDP per capita. Our estimates imply that delaying the Green Revolution for ten years would have reduced GDP per capita in 2010 by US$1,273 (PPP adjusted), or 17 percent, across our full sample of countries.

…By 2010, the cumulative global loss of GDP of delaying the Green Revolution ten years would have been about US$83 trillion – roughly a year of present-day global GDP. Needless to say, this surpasses the amount of resources that went into developing HYVs by several orders of magnitude.

The income loss would have been much greater had the Green Revolution never happened, perhaps reducing GDP per capita in the developing world to 50 percent of its current level, if our estimates are taken at face value – although we stress that this number is subject to considerable uncertainty and depends on a somewhat implausible counterfactual. Despite these reservations, the results of this paper clearly place the Green Revolution among the most important economic events in the 20th century.

From Two Blades of Grass, a new paper recently published in the JPE by Douglas Gollin, Casper Worm Hansen, and Asger Wingender. The emphasis is mine. Here is an ungated version.

There are some larger implications for how we think about the drivers of development:

How important is agricultural productivity growth in development? Early views of development assumed that most of the impetus for development and economic growth would necessarily come from the industrial sector, which was thought to offer the potential for rapid rates of productivity growth. In contrast, the agricultural sector in most developing countries was seen as backward and stagnant, with limited potential for growth…

In recent years, agriculture’s potential significance has been a theme in a renewed literature on structural transformation and economic growth. A new literature has offered theoretical models in which agricultural productivity growth is important for subsequent industrialization and in which agricultural productivity differences play a role in explaining cross-country disparities in income. However, it has proved difficult to assess empirically the overall importance of agriculture’s contributions to growth…

3 Responses

  1. Most of Africa is still waiting for a Green Revolution and the promise of an agricultural productivity transition.

  2. Have they factored in the direct and indirect costs incurred from contributions to: global warming; deforestation; terrestial, river and ground water pollution; irrevesible land-use change; soil loss; biodiversity loss (both natural and agricultural); food sovereignty; indigenous knowledge loss; potential future costs of monocrop vulnerability to pests and increasing gloabl dependence on a finiate resurce of petro-chemicals on which GR agricultre depends? Perhaps more difficult to measure well-being costs of disenfanchised and often disposed traditional farming communities. If not yet included, would be interesting how these costs affect the findings. The conlusion might remain essentially the same (most significnat economic event of last century) but it may not be as positive as the summary suggests.