THE CONTRIBUTION OF AGRICULTURE IN THE MEXICAN ECONOMY: A REVIEW

Abstract

In the mid-20th century, the theory of economic growth predicted a gradual decline in the agricultural sector’s share of the overall economy. This prediction is based on specific assumptions about the sector that are not necessarily true at all times. In the case of Mexico, to test this theoretical prediction, an empirical analysis was conducted using quarterly data covering the period from 1993 to 2024. The hypothesis to be tested was that the contribution of agriculture may follow its own trajectory, independent of the prediction of a secular decline in the sector. During the period examined, using a linear adjustment of the agricultural sector’s contribution with a structural break, both a declining trend and a more recent increasing trend in its contribution were found, thus refuting the prediction of classical growth theory. Although the theoretical prediction points in one direction, the empirical result is different. The share of the agricultural sector may follow its own pattern in economic evolution. In the search for an explanation of the sector’s recent trend, quantity and price indices were constructed to explore whether the aforementioned adjustment is due to price or quantity. The results indicate that the price component is the basis for explaining the observed phenomenon.