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Evaluating the Economic Efficiency of Agricultural Activities in Developing Countries: Domestic Resource Costs and the Social Cost-Benefit Ration

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  • Masters, William A.
  • Winter-Nelson, Alex

Abstract

This paper demonstrates that the conventional Domestic Resource Cost (DRC) indicator is biased against factor-intensive, low-input techniques, and that a simple Social Cost-Benefit (SCB) ratio is generally a more appropriate measure of economic efficiency. The potential policy significance of improved measurement is shown with data from Zimbabwe and Kenya. In Zimbabwe, the DRC is shown to incorrectly rank high-input large-scale farming systems above more Jabour-intensive smallholder systems; in Kenya, the DRC incorrectly ranks high-input horticultural crops above more Jabour-intensive food grains and traditional export crops.

Suggested Citation

  • Masters, William A. & Winter-Nelson, Alex, 1997. "Evaluating the Economic Efficiency of Agricultural Activities in Developing Countries: Domestic Resource Costs and the Social Cost-Benefit Ration," 1997 Occasional Paper Series No. 7 198201, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaaeo7:198201
    DOI: 10.22004/ag.econ.198201
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    References listed on IDEAS

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