Urbanization and the Optimal Routes to Structural Transformation
How urbanization shapes structural change out of agriculture? To what extent this is mediated by productivity shocks in agriculture? How transport infrastructure development can be better designed to account for these effects? This article estimates the effects of urbanization and road infrastructure development on the structural transformation of rural villages in Chile. Following a market access approach derived from a spatial quantitative model of structural transformation that is informed by the elasticities of urban market access on the population, and farm and non-farm employment of rural villages. The results support the hypothesis of the diversification of the rural economy which is also consistent with the intensification of agriculture. Moreover, the evidence suggests important heterogeneous effects across rural areas, that reveal that transport infrastructure development can be better designed to take advantage of areas with better conditions for agricultural production.
with O.M. Vargas and J.A. Berdegue