Agricultural competitiveness: The case of the United States and major EU countries

Growth in the agricultural GDP of four major European countries is compared with US agricultural growth for the period 1974–1993. The agricultural sector's relative prices are taken into account along with economy-wide factor market adjustments. For Denmark, France, Germany and the UK, the effects of declining real prices and changes in input levels on growth in agricultural GDP are relatively small. Total Factor Productivity (TFP) growth appears to be the major contributor to European agricultural GDP growth. In comparison, TFP is the major source of growth in US agricultural GDP, but its rate of growth is lower than the European countries. In contrast, the declining real prices for US agriculture had a relatively large effect on its GDP. However, in recent years, the effects of declining real prices and declining rates of growth in TFP on European agriculture are relatively large. In the longer-run, the relative competitiveness of US agriculture is largely dependent on its ability to sustain and increase growth in TFP.