The lack of dynamic competition and the market insufficiency for agricultural productivity growth: Implications for the role of the state

Abstract

AbstractThis paper shows that there is lack of dynamic competition in agriculture, making the market mechanism of agriculture insufficient for bringing about technological innovations. The market insufficiency differs from market failures in that the former causes dynamic inefficiency and lack of growth while the latter causing static inefficiency in resource allocation at a point in time. As a result, farm firms represent a special type of business organizations lacking dynamic competition. This paper proposes and evaluates hypotheses about the shifting roles of the state and agro‐input supply sector in bringing about agricultural productivity growth across countries at different development stages.