New estimates of total factor productivity, technical and efficiency changes for the global agricultural economy

Néstor A. Le Clech,Carmen Fillat-Castejon

doi:10.5424/sjar/2020182-15224

Abstract

Aim of study: The accuracy of international and intertemporal comparisons of total factor productivity (TFP) growth requires the use of indicators that satisfy transitive and multiplicative properties, such as the Färe-Primont index (FPI). This paper compares the evolution of TFP in global agriculture.Area of study: Worldwide.Material and methods: The evolution of TFP in global agriculture was measured by the traditional Malmquist index (MI) and by the FPI, with alternative measurements of input capital.Main results: We found a significantly lower TFP growth with the FPI. New estimates of TFP growth for 1961-2015 show that output-oriented scale-mix efficiency drives TFP growth, with an important technological change between 1996 and 2000 and another in 2014. Regional comparisons reveal heterogeneous trends in efficiency, linked to institutional reforms and agricultural R&D.Research highlights: More realistic figures and global comparisons of agricultural productivity provide a better understanding to implement better policies. Available measures of capital stock do not yield significant differences in TFP estimations, but the precise identification and estimation of the heterogeneous drivers and burdens is fundamental for boosting agricultural productivity and its benefits on global food security.

Highlights

The availability of good indicators of the evolution of total factor productivity (TFP) is essential for analyzing the growth of an economy and the evolution of its supply and competitiveness
The cumulative change of TFP in 2007 is 1.595 and 1.550 for the Malmquist index (MI), models 1 and 2 respectively, while the Färe-Primont index (FPI) change is 1.512 and 1.468 for models 1 and 2 (Fig. 1). This result indicates that, for both models, the MI is higher than the FPI and could be interpreted as an overestimation of the growth of TFP in agriculture
We have carried out new estimations of the TFP in the agricultural sector based on the most recent advances made by O’Donnell (2014) that allow multilateral and international comparisons

Summary

Introduction

The availability of good indicators of the evolution of total factor productivity (TFP) is essential for analyzing the growth of an economy and the evolution of its supply and competitiveness. Le Clech & Fillat (2017a) showed that some of the most important determinants of agricultural supply dynamics are those related to sectoral productivity, such as efficiency and technology improvements Their findings reveal that both of these factors have an important positive and highly significant effect on the international agricultural supply of grain and oilseed. They concluded that a useful economic policy to promote the development of this sector would be one focused on stimulating technical change and efficiency improvements in this sector. More realistic figures and adequate international comparisons may reveal the need to design better policies to improve agricultural productivity in some regions where its growth is meager or zero, as is the case of Europe

Methods

Results

Conclusion