Lack of Dynamic Gains From Agricultural Trade: Implications for Economic Development of Food‐Deficit Low‐Income Countries

Abstract

This paper examines whether agricultural trade liberalization fosters agricultural and economic development in net food‐importing countries in sub‐Saharan Africa. Insights from the new trade literature suggest that while manufacturing often realizes dynamic productivity gains from trade through firm‐level competition and innovation, such mechanisms are largely absent in agriculture. In sub‐Saharan Africa, productivity improvements are unlikely to result from freer trade or intensified market competition among farm producers. Instead, sustained public investment in infrastructure, institutional development, extension services, and research and development remains the primary driver of growth. Thus, whereas productivity growth in manufacturing is primarily firm‐driven, in agriculture it is shaped by state policies and public investment. The key policy implication is that agricultural trade liberalization should not be prioritized as a development strategy in the region.