AGRICULTURAL GROWTH AND AGRARIAN STRUCTURE IN THE BRAZILIAN CERRADO: THE ROLE OF LAND PRICES, NATURAL RESOURCES AND TECHNOLOGY.

Abstract

This paper argues that the rapid agricultural expansion of the cerrado
regions in Brazil is due to the low price of land in these regions, as compared with the
other agricultural regions of Brazil and abroad. This low price of land is, in turn,
attributed not only to the greater distance of these regions from the main markets, but
also to the limitations of natural resources (the extremely harsh drought period, which
limits agricultural activities to grains and livestock) and, above all, to technological
innovations that “produced” an abundance of land of good quality. In order to show
more clearly how this process has taken place, the paper develops a model of the land
market that allows for “production of land,” and derives the implications of such a
model for production functions and total factor productivity (TFP) analyses.