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Abstract
Special circumstances in the agricultural sector have limited the use of comparative
advantage in addressing the planner's dilemma of allocating investment
between industry and agriculture and in examining the doctrine of food selfsufficiency.
A three-factor model of agricultural trade, extending earlier models,
is used to address some of these special circumstances and to formulate a theory
of agricultural comparative advantage under changing economic conditions.
Emphasis is placed on the short-run fixity of sector-specific capital stocks, the
role of qualitative differences in land (natural resource) endowments, and on
non-homothetic preferences. In addition to insights on agricultural comparative
advantage, implications for project evaluation are considered.