Human capital, infrastructure, and the productivity of Indian rice farmers

Abstract

Along with investments in agricultural research, extension, and education, limited investment in transportation and communication infrastructure is often identified as an important constraint on the diffusion and use of new agricultural technology. Yet there are few systematic studies of the relationship between agricultural infrastructure and agricultural productivity, and there do not appear to be any studies which model and measure the productivity effect of infrastructure at the farm level. The aim of this paper is to fill this theoretical and empirical hiatus by investigating how human capital and infrastructure constrain the choice of technology and hence productivity. The effects of these capital constraints are translated into a ‘variable coefficient’ production function to measure their productivity effects on Indian rice farmers. The findings indicate that productivity is a function of the farmer's schooling, extension programs, transportation and communication infrastructure, irrigation availability, the utilization of high yielding varieties, and climatic factors. These findings thus support the hypothesis that agricultural productivity is a function of transportation and communication infrastructure, and suggest that infrastructure development is important to both growth and equity concerns in policy planning.