Agricultural Productivity and Structural Transformation: Evidence from Brazil

We study the effects of the adoption of new agricultural technologies
on structural transformation. To guide empirical work, we present a
simple model where the effect of agricultural productivity on industrial
development depends on the factor-bias of technical change.
We test the predictions of the model by studying the introduction of
genetically engineered soybean seeds in Brazil, which had heterogeneous
effects on agricultural productivity across areas with different
soil and weather characteristics. We find that technical change in soy
production was strongly labor-saving and led to industrial growth,
as predicted by the model.