DDP 736. Bruce A. Larson. "Accounting for Sustainable Agricultural Growth in Central America." February 2000. 63 pp. Central America Project Series

Agricultural growth remains fundamentally important for future economic growth and development possibilities in Central America. Based on a conceptual understanding of agricultural growth, and empirical evidence based on the past and recent experience in Central America and other regions of the world, the purpose of this paper is to outline reasonable growth possibilities for agriculture in Central America in the future. While individual countries must decide for themselves, 4% per year average growth in real agricultural GDP is a high but possible objective to attain. The analysis explains why most of this growth must come from yield growth (3%), with essentially no growth in land and minor growth in net social values per unit of output (1%). Growth in net social values per unit of output (per unit profits minus any externalities) must come mainly from reductions in input costs and externalities associated with production. The key area of focus for the future is how to increase labor productivity without substantially increasing the use of other inputs that also have negative environmental and health effects.

Keywords: agricultural growth, Central America, productivity

JEL Codes: O47, O13, Q10

Bruce A. Larson is an Assistant Professor at the Department of Agricultural and Resource Economics at the University of Connecticut-Storrs. Address for Correspondence: Bruce Larson, University of Connecticut, U-21, Storrs, CT 06269-4021. Email: blarson@canr.cag.uconn.edu.