Estimating the Impact of Trade Costs on Agricultural Productivity

Abstract

Utilizing a new measure of trade costs, this study tries to provide first evidence of the link between trade costs and productivity in the agricultural sector. Using a panel data of readily available data, across the 34 OECD member countries, this paper tries to assess and estimate the impact of trade costs on agricultural sector productivity for the 1995 – 2014 period. According to the results, there is strong evidence that when the agricultural sector faces lower trade costs, it tends to be more productive and there is some evidence that it experiences higher productivity growth too.