Surplus transfer and the terms of trade in Mexican agriculture

This study presents an evaluation of the transfers of resources among economic sectors. It examines the different mechanisms that have been responsible for the flow of resources between agriculture and the rest of the economy. Special attention is devoted to both the domestic and the international terms of trade for agriculture. The measurements are based on a series of input-output tables and on alternative definitions of the terms of trade. Due to the great importance of Mexican agriculture as a supplier of foreign exchange, the contribution of agriculture to the national capacity to import is also evaluated. Finally, this study considers the differential impact of extractivist policies on the heterogenous agricultural sector by discussing and comparing two of the most important crops: maize and wheat.;One of the main conclusions of this study is that there has been a transfer of resources from the rest of the economy to agriculture before 1970. From then on, the flow was reversed and the agricultural sector became a net receiver of resources mainly through all kinds of subsidies. The amounts transferred to agriculture after 1970 were greater than the amounts that flowed into agriculture before that year.;During the 1950-1980 period analyzed, the contribution of agriculture to the capacity to import grew due to both an improvement in the terms of trade vis-a-vis the rest of the world and growth of the volume exported, with agriculture playing a more important role than livestock as a supplier of foreign exchange.