Agricultural productivity and economic development: the contribution of clover to structural transformation in Denmark

Abstract

This paper contributes to the debate on the impact of agricultural productivity on long run economic development. It presents evidence that widespread adoption of clover contributed to local economic development based on a panel of 56 Danish market towns. We adopt a differences-indifferences approach augmented by an instrumental variable and find that the adoption of clover accounts for about 8 percent of the growth in market town population from 1672 to 1901. To deal with the potential endogeneity of clover adoption, we exploit variation in soil suitability for alfalfa, another legume that had been widely adopted only after 1901, as an instrumental variable. The analysis suggests that the effect of the adoption of clover on the process of development was mediated by its impact on human capital formation.

Agricultural Policy and Long-Run Development: Evidence from Mussolini's Battle for Grain

“…In particular, when technical progress extends the set of production inputs (Romer, 1987(Romer, , 1990, it increases managerial complexity and stimulates the returns to managerial human capital (Rosenzweig, 1980;Yang and An, 2002). 65 My hypothesis is further supported by Dall Schmidt et al (2018)'s finding of the effect of clover adoption across 17th century Danish market towns on the prevalence of folk high schools. 66 Gender-level observations are only available for educational attainment.…”

“…Thus, the paper also relates to Nunn and Qian (2011), who study the effect of the introduction of a more productive crop on urbanization in the long-run; to the study of the effect of agricultural technical change on local economic activity (Hornbeck and Keskin, 2015); 22 to Marden (2015), who emphasizes the importance of an agricultural reform in the Chinese recent history for capital accumulation; to Dall Schmidt et al (2018)'s study of the positive link between clover adoption and urban growth across 17th century Danish market towns, which were characterized by low degree of trade openness; to recent studies of the effects of weather-induced changes in agricultural productivity (Colmer, 2018;Santangelo, 2016); to works studying the complementarity between agricultural technological progress and human capital (Foster and Rosenzweig, 1996); to Fiszbein (2017), who studies the effect of agricultural diversity on human capital in agriculture as an engine of industrialization; and to works indicating human capital as an important driver of city growth and urbanization in historical contexts (Dittmar, 2011;Squicciarini and Voigtländer, 2015;Dittmar and Meisenzahl, 2016).…”

The Effects of the Catch-Up Mechanism on the Structural Transformation of Sub-Saharan Africa

“…Stokey (2015) finds that local human capital is critical in letting countries effectively exploit technologies imported from abroad and in allowing that inflow to continue. Similarly, Schmidt et al (2018) find that the effect of adopting clover on the urban population in Denmark was mediated by its impact on human capital formation. However, in an environment that is not conducive for economic growth, human capital just as any other resource can be squandered.…”

World agricultural convergence

“…On the other hand, agriculture has significant impacts on industrialization, urbanization, and the long-term evolution of the economy (Ashraf and Galor 2011 ; Carillo 2018 ). Some scholars (e.g., Lewis ( 1954 ), Ranis and Fei ( 1961 ), Foster and Rosenzweig ( 1996 ), Bustos et al ( 2016 ), and Schmidt et al ( 2018 )) believe that higher agricultural productivity can enhance human capital accumulation, reallocate labor and other resource towards the industrial sector, and therefore stimulate the process of economic development. Other scholars (e.g., Matsuyama ( 1992 ), Foster and Rosenzweig ( 2004 ), Galor and Mountford ( 2008 )), however, highlight that agricultural productivity growth may foster the comparative advantage of the agricultural sector, limit human capital formation, and hinder industrialization, especially in an open economy.…”