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Scenarios and Options for Productivity Growth in Philippine Agriculture An Application of the AMPLE

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  • February 2010

    (Philippine Institute for Development Studies)

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    Abstract

    Sustaining and accelerating agricultural growth remains a development imperative in view of persistent rural poverty and emerging threats to food security. While growth can be achieved by expansion of agricultural area and input intensification, growth through improvement in productivity is a promising option. However, productivity growth appears to be a relatively low priority for policy. Rather, the agricultural strategy is oriented toward domestic protection to achieve selfsufficiency and to support production by generous subsidies. In contrast, an alternative strategy may be one that is competitionoriented and productivitybased, i.e., one that favors integration with the international economy through trade, as well as making domestic investments targeted at productivity growth. Scenarios for Philippine agriculture under these policy options are evaluated using a new supply and demand model (Agricultural Multimarket Model for Policy Evaluation or AMPLE). Model simulations suggest that : rapid productivity growth, even when combined with trade liberalization, is generally favorable for farmers and consumers based on improved outlook on production, exports, and food consumption. In contrast, trade liberalization alone has a contractionary effect on agriculture; and production support is a costly instrument for promoting agricultural growth. The model experiments suggest that a backtobasics strategy for agriculture, incorporating various productivitybased instruments such as investments in R&D, extension, rural infrastructure, protection of the resource base of agriculture, and even human capital formation and institutional reforms, are key to longterm agricultural growth.

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    Bibliographic Info

    Paper provided by East Asian Bureau of Economic Research in its series Microeconomics Working Papers with number 22806.

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    Date of creation: Jan 2010
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    Handle: RePEc:eab:microe:22806

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    Related research

    Keywords: Productivity growth; agriculture; scenario analysis; supply and demand; technological change;

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    1. David, Cristina C. & Balisacan, Arsenio M., 1995. "Philippine Rice Supply Demand: Prospects and Policy Implications," Discussion Papers DP 1995-28, Philippine Institute for Development Studies.
    2. Yair Mundlak & Donald Larson & Rita Butzer, 2004. "Agricultural dynamics in Thailand, Indonesia and the Philippines," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 95-126, 03.
    3. Lau, Lawrence J. & Yotopoulos, Pan A., 1989. "The meta-production function approach to technological change in world agriculture," Journal of Development Economics, Elsevier, vol. 31(2), pages 241-269, October.
    4. Cororaton, Caesar B. & Caparas, Maria Teresa, 1999. "Total Factor Productivity: Estimates for Philippine Economy," Discussion Papers DP 1999-06, Philippine Institute for Development Studies.
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