Impacts of economies of scale and technological change on agricultural productivity in Japan

Abstract

This study investigates the determinants of changes in the growth of conventionally measured total factor productivity (TFP) in postwar Japanese agriculture. The investigation is carried out for different size classes of farms for the 1958–1985 period by decomposing the TFP growth rates into the scale effect and technological change effect based on the estimates of a Stevenson-Greene type translog cost function. It is found that in smaller scale farms technological change played a most important role in determining the TFP growth rate, whereas the scale effect was a dominant determinant of the TFP growth rate in larger scale farms.