Agriculture in Amazonia: Growth with Abundance of Natural Resources in a Peripheral Region

Abstract

This paper shows how lack of competitiveness for commercial agriculture in Amazonia makes difficult the attraction or retention of mobile factors (capital and labor) generating a state of continuous scarcity for these factors. It is also shown that policies attempting to regain equilibrium in factor proportions like capital subsidies or colonization programs are ineffective. Finally, it is shown that attempts to maximize the return on scarce factors lead to overutilization of natural resource and environmental degradation. Although global price incentives policies can help, technical progress is the important variable for the long run sustainability of agriculture in Amazonia.