Prof. Angus Chu, Head of the department of Economics, FSS publishes an article of “Agricultural Revolution and Industrialization”, working with Prof. Pietro Peretto and Dr. Wang Xilin, forthcoming in Journal of Development Economics. Here is the abstract:
This study explores how agricultural technology affects the endogenous takeoff of an economy in the Schumpeterian growth model. Due to the subsistence requirement for agricultural consumption, an improvement in agricultural technology reallocates labor from agriculture to the industrial sector. Therefore, agricultural improvement expands firm size in the industrial sector, which determines innovation and triggers an endogenous transition from stagnation to growth. Calibrating the model to data, we find that without the reallocation of labor from agriculture to the industrial sector in the early 19th century, the takeoff of the US economy would have been delayed by about four decades.