The Application of International Trade Theories to Agriculture

Abstract

International trade in agriculture has recently been recognized as an important driver of economic growth, especially in Sub-Saharan Africa (SSA) where agriculture is the major export products. This paper surveys a broad range of both traditional and modern theories of trade with reference to agriculture. Historically, trade in agrarian products was concentrated on comparative and factor endowment models. The application of modern theories in agriculture has been increasing in recent years. In this survey, it could be concluded that those models help in explaining the current patterns or the factor content of trade. All the theories appear to be less relevant in SSA countries than in industrialized countries. For instance, even though agriculture is the primary employer of labour, principal export commodities from the SSA countries, they are not the top major exporters of agricultural products. Instead, some of them are net importers of food and agricultural products. This is partly, due to limited market access of the raw products, low productivity due to limited capital and technology. In order to gain more from trade and experience a favourable trade balance in agriculture, SSA countries should take advantage of their unique climatic conditions and concentrate on producing and processing those commodities that cannot be produced by the West in large quantities for economies of scale, self-sufficient and exports. DOI: 10.5901/mjss.2015.v6n6s4p209