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An International Comparison of Productivity Change in Agriculture and the Economy as a Whole

Author

Listed:
  • Nuno Moutinho

    (CETE, Faculdade de Economia, Universidade do Porto)

  • Fernado S. Machado

    (Faculdade de Ciências Económicas e Empresariais, Universidade Católica Portuguesa)

Abstract

A common and longstanding assumption in the economic growth literature has been that total factor productivity growth is lower in the agriculture sector than in the rest of the economy. Using a stochastic production frontier finite mixture model, labor productivity change is decomposed into catch-up, technological change and factor accumulation effects and stochastic shocks. This decomposition is investigated separately in the agriculture sector and the economy as a whole using a balanced panel data set of 45 countries in different development stages during the time period 1967-1992. The impact of labor productivity change components on the evolution of the cross-country counterfactual distribution of labor productivity is also analyzed. For the overall economy, the empirical results indicate that growth and the twin-peak distribution of labor productivity are driven by capital deepening. However, the results for the agriculture sector suggest that labor productivity distribution is brought by total factor productivity changes rather than factor accumulation. Furthermore, the agriculture sector exhibits reductions in capital per worker as well as stronger catch-up and technological change effects. Thus, growth of the rest of the economy appears to owe more to capital deepening and resource reallocation from agriculture than to faster productivity change.

Suggested Citation

  • Nuno Moutinho & Fernado S. Machado, 2003. "An International Comparison of Productivity Change in Agriculture and the Economy as a Whole," CEF.UP Working Papers 0309, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:cetedp:0309
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    File URL: http://www.fep.up.pt/investigacao/cete/papers/dp0309.pdf
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    Citations

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    Cited by:

    1. Ana Lozano-Vivas & Jesús Pastor, 2006. "Relating Macro-economic Efficiency to Financial Efficiency: A Comparison of Fifteen OECD Countries Over an Eighteen Year Period," Journal of Productivity Analysis, Springer, vol. 25(1), pages 67-78, April.
    2. Nadia Belhaj Hassine & Magda Kandil, 2009. "Trade liberalisation, agricultural productivity and poverty in the Mediterranean region," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 36(1), pages 1-29, March.
    3. Peterson, Everett B. & Graham, Thea, 2008. "Open Skies: An Assessment of the US-EU Open Aviation Area Agreement," Conference papers 331713, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

    More about this item

    Keywords

    Agriculture; Labor Productivity Growth; Catch-Up; Total Factor Productivity; Factor Accumulation; Panel data; Stochastic Production Frontier; Finite Mixture Model.;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C49 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Other
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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