Statistiques
 

Macroeconomic statistics

Global Trends in GDP, Agriculture Value Added, and Food-Processing Value Added (1970-2015)

March 2017

The Regional Decomposition of Global GDP

In 2015, global real Gross Domestic Product (GDP) reached $59.6 trillion in constant 2005 US dollars, 3.8 times its 1970 level of $15.7 trillion (Graph 1). Real GDP grew at a global annual rate of 2.9% between 1970 and 2015, led by Asia & Pacific (5.9%), Africa (3.4%), and Latin America (3.2%). It grew more slowly in the other regions: Northern America (2.7%), Europe (2.1%), and the Other Developed countries (2.6%), consisting of Australia, Japan and New Zealand (Table 1).

Global GDP and its Regional Distribution - constant 2005 USD (billions), 1970-2015 

As a result of these inter-regional growth differentials, the 1970-2015 period was characterized by some redistribution in the regional contributions to global GDP. Particularly, while the three developed regions were the main contributors throughout the 46-year period, their overall share in global GDP shrank from 86% in 1970 to 68% in 2015. Meanwhile the Asia & Pacific’s share almost quadrupled from 6% to 23% (Graph 2).

Table 1. Average Annual Growth Rate, VA AFF and GDP - 2005 USD, 1970-2015(*), (**)

 

 

1971-1980

1981-1990

1991-2000

2001-2010

2011-2015

1970-2015

Africa

VA AFF

0.85%

2.68%

2.19%

5.35%

3.51%

3.31%

 

GDP

3.72%

2.18%

2.26%

4.84%

2.97%

3.41%

Asia & Pacific

VA AFF

2.05%

4.00%

2.72%

3.07%

2.37%

3.14%

 

GDP

4.93%

5.09%

5.37%

6.50%

4.37%

5.85%

Europe

VA AFF

2.44%

1.36%

-0.13%

0.41%

0.14%

1.08%

 

GDP

2.95%

2.40%

1.71%

1.36%

0.74%

2.11%

Latin America & Caribbean

VA AFF

2.78%

1.41%

2.29%

2.48%

2.48%

2.61%

 

GDP

5.38%

1.36%

2.81%

3.01%

1.16%

3.21%

Northern America

VA AFF

-0.26%

2.43%

2.90%

3.14%

1.84%

2.26%

 

GDP

2.90%

3.00%

3.43%

1.56%

1.75%

2.74%

Other Developed(***)

VA AFF

0.29%

1.29%

0.62%

-0.52%

0.54%

0.09%

 

GDP

3.75%

3.99%

1.32%

0.92%

1.18%

2.57%

Global

VA AFF

1.73%

2.55%

1.83%

2.55%

2.02%

2.34%

 

GDP

3.35%

2.95%

2.65%

2.37%

1.93%

2.94%

(*) Compound average; (**) Value added in agriculture, forestry, and fishing; (***) Other Developed includes Australia, Japan and New Zealand

Regional Contribution to Global GDP – shares, 1970-2015

The Regional Decomposition of Global Agriculture Value Added

Between 1970 and 2015, real global value-added in agriculture, forestry and Fishing (VA AFF) rose from $0.7 trillion to $2.0 trillion in constant 2005 USD (Graph 3). This threefold increase corresponds to a global annual average growth rate of 2.3%. Both at global and regional levels, the rate was consistently below that of total GDP which suggests that the other industries of the economy grew on average at somewhat faster rates than agriculture, forestry and Fishing (Table 1).

In 1970, the main contributors to global VA AFF were Asia & Pacific (35%), Europe (27%), with the Other Developed region closing the leading trio (13%). By 2015, Asia & Pacific contributed to a half of the worldwide total (49%), while the shares for Europe and the Other Developed region had fallen to 15% and 5%, respectively (Graph 4). The global contributions of the three remaining regions stayed stable or increased slightly between 1970 and 2015. Specifically, Africa’s contribution rose from 8% to 13%, Latin America and the Caribbean’s rose from 8% to 9%, and North America’s remained at around 9% with year-to-year fluctuations, including a decline to slightly over 7% in the late 1970s to mid-1980s.

Global VA AFF and its Regional Distribution - constant 2005 USD (billions), 1970-2015

Regional Contribution to Global VA AFF - share, 1970-2015

Long-run Trend in the Regional and Global VA AFF-to-GDP ratios

The total contribution of agriculture value added to global GDP fell from 4.3% to 3.3% over the 1970-2015 time span. The decrease in the relative share of agriculture was the strongest in Asia & Pacific where industry share in Asian GDP shrank from 24% in 1970 to 7% in 2015, in sharp contrast with the increasing contribution of Asia and the Pacific to global agriculture value-added.

The region’s higher global share compared to other regions may reflect productivity gains driven by rapidly increasing physical investment flows directed towards the agriculture industry in the Asia & Pacific. The industry VA declining share in the Asia & Pacific GDP also indicates other industries in the economy are growing at an even faster pace. 

Agricultural Value Added as a share of GDP by region - constant 2005 USD, 1970-2015

Agriculture and food-processing value added - Cross section analysis, trends and interlinkages

As economies grow and develop, the productive landscape undergoes structural transformations, industries become more interrelated, and determining the importance of any specific industry becomes difficult. This is certainly the case for agriculture where agricultural production understates the industry’s overall contribution to the economy through its links to numerous industries such as fertilizer production, food processing and manufacturing, transportation, wholesale, and retail distribution. This raises questions about the relative role of these industries as an economy develops, the impact of agriculture on the entire value-chain and the drivers behind time trends and country-level differences.  

In a first attempt to tackle these issues, the analysis is extended to the food-processing industry in what follows. The focus is on the respective contributions of agriculture and food-processing to GDP and on their interlinkages over time and across countries. Contrary to the agricultural industry, data on the food-processing industry are incomplete in the time and geographical coverages (unbalanced panel data set). For this reason, we cannot proceed to global and regional analysis and we turn to cross-country analysis.

Contribution of Agriculture and Food-Processing VA to GDP for Select Countries, 1990-2014 (unless otherwise indicated)

Taking select countries, Graph 6 displays the trends in agriculture and food-processing valued added (with units reported on left-hand side axis) from 1990 to 2014. The stacked areas provide an idea of how the two industries compare in terms of their size. For ease of reading, the food processing-to-agriculture value added ratio is also displayed (with units reported on right-hand side axis). 

The size of the food-processing industry relative to that of agriculture varies substantially from country to country: while the food-processing value added well surpasses that of agricultural, forestry and fishing in the United States, it remains small compared to total agriculture in other countries. Cross-country differences also appear in the trends of the food-to-agriculture value added ratio. Over the 1990-2014 time span, the ratio remains quite stable in the United States and Spain but showed upward patterns in Brazil, India and Turkey, suggesting an increasing size of the food-processing industry compared to agriculture. Kenya is among the few countries included in FAO Macro-Indicators dataset which actually saw a decrease in the food processing-to-agriculture ratio.

Table 2 provides a first evidence of the interlinkage of the food processing-to-agriculture value added with the level of economic development. Over the 2010-2012 time span, the size of the food-processing industry is about half that of the agricultural industry in terms of value added in the developing countries. This contrasts with the developed countries that have an average ratio of 1.2 over the 2010-2012, indicating that the food processing industry surpasses agriculture. At a regional level, Africa has the smallest food processing-to-agriculture ratio (0.2) followed by Asia & Pacific (0.5) and Latina America & Caribbean (0.8). The highest ratio is observed in the Other Developed region (1.8), while that for Northern America and Europe were around 1.2.

Table 2. Average Food-Processing-to-Agriculture Value Added Ratio by Country Grouping (2010-2012)

All countries

0.880

Developed countries

1.230

Developing countries

0.455

Africa

0.219

Asia & Pacific

0.465

Europe

1.196

Latin America & Caribbean

0.798

Northern America

1.246

Other Developed

1.756

All countries

0.880

Developed countries

1.230

Developing countries

0.455

 

A graphical display of the pairwise correlation matrix between the ratios agriculture value added over GDP (aff_to_GDP), food processing value added over GDP (fbt_to_GDP), food processing over agriculture value added (fbt_to_aff), and the log of GDP per capita (lgdp_procap) is provided underneath. The correlation between the agriculture value added-to-GDP ratio and GDP per capita is negative (with coefficient equal to -0.81), confirming a well-known fact in the economic development literature that as economies get richer, the relative size of the primary sector in total economy shrinks. The same sign is found for the correlation between the food processing value added-to-GDP ratio and GDP per capita though the coefficient value is somewhat lower (-0.45). However, a positive correlation is found between GDP per capita and the food processing-to-agriculture value added ratio (0.54), suggesting a shift in sectoral composition. Even though the relative contribution of both agriculture and food-processing diminishes as economies get richer, the food-processing industry grows in size compared to the agricultural industry.

The above-mentioned positive relationship is found in all regions, as evidenced in Graph 7 in which the trend lines all points upward.

Pairwise correlation analysis