PRODUCTIVITY INCREASES AND EXPORTS: AN EXPLORATORY ANALYSIS

Abstract

This paper shows impacts of productivity gains on agricultural exports. The data indicate that productivity gains are associated with significant increases in exports. This association is clear in the Brazilian data and it carries great importance in view of the fact that the high instability in the economy lead to instability in the real exchange rate. Since implications of productivity gains go beyond agriculture, the analysis has utilized an applied general equilibrium model, GTAP. This model shows the importance to take into account the behavior of productivity in other sectors and in other countries to determine the volume of resources directed to agricultural research. The OECD countries, among which one finds important competitors of Brazil, spend a large share of their budgets on agro industrial research. The high levels of protection enjoyed by this sector contribute to increase the private sector capacity to invest and reinforces the process of productivity gains. To maintain the competitiveness of Brazilian agriculture, it is necessary to keep investing in agricultural research.