Changing Agricultural Comparative Advantage

Special circumstances in the agricultural sector have limited the use of comparative advantage in addressing the planner's dilemma of allocating investment between industry and agriculture and in examining the doctrine of food self-sufficiency. A three-factor model of agricultural trade, extending earlier models, is used to address some of these special circumstances and to formulate a theory of agricultural comparative advantage under changing economic conditions. Emphasis is placed on the short-run fixity of sector-specific capital stocks, the role of qualitative differences in land (natural resource) endowments, and on non-homothetic preferences. In addition to insights on agricultural comparative advantage, implications for project evaluation are considered.