Productivity Growth and Convergence in Agriculture versus Manufacturing

Abstract

The growth of agricultural productivity is widely believed to be low. But this study finds the productivity growth rate in agriculture to be higher than that in manufacturing, both on average and for groups of countries at different stages of development. This suggests that a large agricultural sector need not be a disadvantage for growth performance - and may be an advantage. Martin and Mitra examine the growth and convergence of total factor productivity in agriculture and manufacturing in a large sample of countries spanning many levels of development over the period 1967-92. There is a widely held but rarely tested view that the rate of growth in agricultural productivity is invariably low. But Martin and Mitra find that the rate of productivity growth in agriculture has been higher than in manufacturing both on average and for groups of countries at different stages of development. Martin and Mitra find evidence of high rates of technical progress in both agriculture and manufacturing. At all levels of development, however, technical progress appears to have been faster in agriculture than in manufacturing. Moreover, there appears to be a stronger tendency for levels and growth rates of total factor productivity to converge in agriculture than in manufacturing - suggesting that international dissemination of innovations has been relatively rapid in agriculture. These results may well reflect the important investments in agricultural research and development in recent decades. They also highlight the need to continue developing and disseminating innovations if countries are to maintain high rates of productivity growth. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to understand the links between trade and growth.