Economic Growth, Technological Change, and Patterns of Food and Agricultural Trade in Asia

Abstract

This paper projects global food supply and demand to the year 2025, with a particular emphasis on Asia. Technological change is found to be the critical factor in determining whether or not food prices will preserve their long-run, downward trend, as well as the likely patterns of trade and structural change. Historical and projected rates of total factor productivity (TFP) growth are decomposed into outward movement in the frontier and “catching up” to the world frontier. Overall, the baseline scenario reduces the poverty headcount ratio in People’s Republic of China (PRC) by more than 80 percent. In the Association of Southeast Asian Nations (ASEAN) it falls by about 40%. However, in South Asia, the falling headcount ratio (17%) is insuffi cient to lower aggregate poverty, due to the relatively strong rise in the region’s population. In the baseline projections, crop productivity in the ASEAN region declines by 0.4%/year. This refl ects decades of neglect in research expenditures. In an alternative scenario, future ASEAN crop TFP is raised to the Asia-wide rate of 0.95%/year. This alternative scenario boosts production in nearly all sectors of the economy, and lowers the poverty headcount ratio by an additional 14%. This could be expected to lift more than 30 million additional people out of poverty in the ASEAN region.