The growth of the economy

As economies grow and accumulate resources, human and

physical capital become more important relative to farm workers

and farm land. Comparative advantage tends to shift away from

agriculture to manufactured products and services. Within

agriculture, trade is often discussed in terms of bulk, semiprocessed

and final (or processed) products. Wheat, for example, is

a bulk product. It is used to make flour, a semi-processed product,

which in turn is used to make bread, a final product.

The least developed countries and countries with lower incomes

tend to have a comparative advantage in the production of landbased

bulk agricultural and horticultural products. Comparative

advantage in processed products, the items with the highest

export growth rate, is currently dominated by high-income OECD

countries. But that dominance is expected to weaken in the future.

A number of countries in the lower middle-income category have

a comparative advantage in semi-processed products.

Many of the leading exporting countries are also among the

leading importing countries, often for similar products, suggesting

two-way trade in agro-food products. Differences in varieties,

production methods and tastes can promote this two-way trade,

as well as the fact that products are in season at different times in

different parts of the world.