IDEAS home Printed from https://ideas.repec.org/a/eee/deveco/v155y2022ics030438782100081x.html
   My bibliography  Save this article

The joint effects of information and financing constraints on technology adoption: Evidence from a field experiment in rural Tanzania

Author

Listed:
  • Harou, Aurélie P.
  • Madajewicz, Malgosia
  • Michelson, Hope
  • Palm, Cheryl A.
  • Amuri, Nyambilila
  • Magomba, Christopher
  • Semoka, Johnson M.
  • Tschirhart, Kevin
  • Weil, Ray

Abstract

Low investment in profitable technologies contributes to persistent poverty. Many farmers in developing countries invest too little in fertilizer despite evidence that fertilizer is profitable. This field experiment investigates a two-part explanation: (1) farmers are reluctant to invest without farm-specific evidence of profitability, possibly because of heterogeneous returns, and (2) information is not sufficient to increase investment because of financing constraints. Farmers in one arm of the experiment receive fertilizer recommendations based on tests of their soils, others receive recommendations paired with an input subsidy, and others receive only the input subsidy. Only farmers who receive recommendations and the subsidy increase fertilizer application and yields relative to the control group. The financing constraint may explain limited response to heterogeneous fertilizer recommendations. The approximate net benefit of increased yields, accounting for the full cost of inputs and soil tests, is equivalent to average wages for seven days of work.

Suggested Citation

  • Harou, Aurélie P. & Madajewicz, Malgosia & Michelson, Hope & Palm, Cheryl A. & Amuri, Nyambilila & Magomba, Christopher & Semoka, Johnson M. & Tschirhart, Kevin & Weil, Ray, 2022. "The joint effects of information and financing constraints on technology adoption: Evidence from a field experiment in rural Tanzania," Journal of Development Economics, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:deveco:v:155:y:2022:i:c:s030438782100081x
    DOI: 10.1016/j.jdeveco.2021.102707
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030438782100081X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jdeveco.2021.102707?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Esther Duflo & Michael Kremer & Jonathan Robinson, 2008. "How High Are Rates of Return to Fertilizer? Evidence from Field Experiments in Kenya," American Economic Review, American Economic Association, vol. 98(2), pages 482-488, May.
    2. Dean Karlan & Robert Osei & Isaac Osei-Akoto & Christopher Udry, 2014. "Agricultural Decisions after Relaxing Credit and Risk Constraints," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 597-652.
    3. Zhiying Xu & Zhengfei Guan & T.S. Jayne & Roy Black, 2009. "Factors influencing the profitability of fertilizer use on maize in Zambia," Agricultural Economics, International Association of Agricultural Economists, vol. 40(4), pages 437-446, July.
    4. Deaton, Angus, 1995. "Data and econometric tools for development analysis," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 33, pages 1785-1882, Elsevier.
    5. Oriana Bandiera & Imran Rasul, 2006. "Social Networks and Technology Adoption in Northern Mozambique," Economic Journal, Royal Economic Society, vol. 116(514), pages 869-902, October.
    6. Dzanku, Fred M. & Jirström, Magnus & Marstorp, Håkan, 2015. "Yield Gap-Based Poverty Gaps in Rural Sub-Saharan Africa," World Development, Elsevier, vol. 67(C), pages 336-362.
    7. Berazneva, Julia & McBride, Linden & Sheahan, Megan & Güereña, David, 2018. "Empirical assessment of subjective and objective soil fertility metrics in east Africa: Implications for researchers and policy makers," World Development, Elsevier, vol. 105(C), pages 367-382.
    8. Corral,Carolina & Gine,Xavier & Mahajan,Aprajit & Seira,Enrique, 2020. "Autonomy and Specificity in Agricultural Technology Adoption : Evidence from Mexico," Policy Research Working Paper Series 9367, The World Bank.
    9. Michael R. Carter & Rachid Laajaj & Dean Yang, 2013. "The Impact of Voucher Coupons on the Uptake of Fertilizer and Improved Seeds: Evidence from a Randomized Trial in Mozambique," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1345-1351.
    10. Carolina Corral & Xavier Giné & Aprajit Mahajan & Enrique Seira, 2020. "Appropriate Technology Use and Autonomy: Evidence from Mexico," NBER Working Papers 27681, National Bureau of Economic Research, Inc.
    11. Munshi, Kaivan, 2004. "Social learning in a heterogeneous population: technology diffusion in the Indian Green Revolution," Journal of Development Economics, Elsevier, vol. 73(1), pages 185-213, February.
    12. McArthur, John W. & McCord, Gordon C., 2017. "Fertilizing growth: Agricultural inputs and their effects in economic development," Journal of Development Economics, Elsevier, vol. 127(C), pages 133-152.
    13. Esther Duflo & Michael Kremer & Jonathan Robinson, 2011. "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 101(6), pages 2350-2390, October.
    14. Timothy G. Conley & Christopher R. Udry, 2010. "Learning about a New Technology: Pineapple in Ghana," American Economic Review, American Economic Association, vol. 100(1), pages 35-69, March.
    15. Kyle Emerick & Alain de Janvry & Elisabeth Sadoulet & Manzoor H. Dar, 2016. "Technological Innovations, Downside Risk, and the Modernization of Agriculture," American Economic Review, American Economic Association, vol. 106(6), pages 1537-1561, June.
    16. Tavneet Suri, 2011. "Selection and Comparative Advantage in Technology Adoption," Econometrica, Econometric Society, vol. 79(1), pages 159-209, January.
    17. Paswel P. Marenya & Christopher B. Barrett, 2009. "State-conditional Fertilizer Yield Response on Western Kenyan Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 991-1006.
    18. Aurélie P. Harou & Yanyan Liu & Christopher B. Barrett & Liangzhi You, 2017. "Variable Returns to Fertiliser Use and the Geography of Poverty: Experimental and Simulation Evidence from Malawi," Journal of African Economies, Centre for the Study of African Economies, vol. 26(3), pages 342-371.
    19. Strauss, John & Thomas, Duncan, 1995. "Human resources: Empirical modeling of household and family decisions," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 34, pages 1883-2023, Elsevier.
    20. Minten, Bart & Barrett, Christopher B., 2008. "Agricultural Technology, Productivity, and Poverty in Madagascar," World Development, Elsevier, vol. 36(5), pages 797-822, May.
    21. Madajewicz, Malgosia & Pfaff, Alexander & van Geen, Alexander & Graziano, Joseph & Hussein, Iftikhar & Momotaj, Hasina & Sylvi, Roksana & Ahsan, Habibul, 2007. "Can information alone change behavior? Response to arsenic contamination of groundwater in Bangladesh," Journal of Development Economics, Elsevier, vol. 84(2), pages 731-754, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michelson,Hope Carolyn & Gourlay,Sydney & Wollburg,Philip Randolph, 2022. "Non-Labor Input Quality and Small Farms in Sub-Saharan Africa : A Review," Policy Research Working Paper Series 10092, The World Bank.
    2. Berazneva, Julia & Maertens, Annemie & Mhango, Wezi & Michelson, Hope, 2023. "Paying for agricultural information in Malawi: The role of soil heterogeneity," Journal of Development Economics, Elsevier, vol. 165(C).
    3. Michelson, Hope & Gourlay, Sydney & Lybbert, Travis & Wollburg, Philip, 2023. "Review: Purchased agricultural input quality and small farms," Food Policy, Elsevier, vol. 116(C).
    4. Lasdun, Violet & Harou, Aurelie P. & Magomba, Christopher & Guerena, David, 2022. "Peer Learning in a Digital Farmer-to-Farmer Network: Effects on Technology Adoption and Self-Efficacy Beliefs," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322561, Agricultural and Applied Economics Association.
    5. Leshan Yu & Yan Song & Haixia Wu & Hengtong Shi, 2023. "Credit Constraint, Interlinked Insurance and Credit Contract and Farmers’ Adoption of Innovative Seeds-Field Experiment of the Loess Plateau," Land, MDPI, vol. 12(2), pages 1-28, January.
    6. Xavier Giné & Shreena Patel & Bernardo Ribeiro & Ildrim Valley, 2022. "Efficiency and equity of input subsidies: Experimental evidence from Tanzania†," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(5), pages 1625-1655, October.
    7. Meysam Kazemi & Faramarz F. Samavati, 2023. "Automatic Soil Sampling Site Selection in Management Zones Using a Multi-Objective Optimization Algorithm," Agriculture, MDPI, vol. 13(10), pages 1-25, October.
    8. KOJIN, Emi & DO, Van Hoang & NGUYEN, Thiet & ARIMOTO, Yutaka & VO, Hong Tu & MANO, Yukichi & NGUYEN, Duy Can & TSUKADA, Kazunari, 2023. "Government and market initiatives for the governance of fertilizer quality in Vietnam," Discussion paper series HIAS-E-130, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Berazneva, Julia & Maertens, Annemie & Mhango, Wezi & Michelson, Hope, 2023. "Paying for agricultural information in Malawi: The role of soil heterogeneity," Journal of Development Economics, Elsevier, vol. 165(C).
    2. Michelson, Hope & Fairbairn, Anna & Ellison, Brenna & Maertens, Annemie & Manyong, Victor, 2021. "Misperceived quality: Fertilizer in Tanzania," Journal of Development Economics, Elsevier, vol. 148(C).
    3. Ayalew, Hailemariam & Chamberlin, Jordan & Newman, Carol, 2022. "Site-specific agronomic information and technology adoption: A field experiment from Ethiopia," Journal of Development Economics, Elsevier, vol. 156(C).
    4. Ram Fishman & Stephen C. Smith & Vida Bobic & Munshi Sulaiman, 2022. "Can Agricultural Extension and Input Support Be Discontinued? Evidence from a Randomized Phaseout in Uganda," The Review of Economics and Statistics, MIT Press, vol. 104(6), pages 1273-1288, November.
    5. Stephen C. Smith & Ram Fishman & Vida BobicÌ & Munshi Sulaiman, 2017. "How Sustainable Are Benefits from Extension for Smallholder Farmers? Evidence from a Randomised Phase-Out of the BRAC Program in Uganda," Working Papers 2017-1, The George Washington University, Institute for International Economic Policy.
    6. Kibrom A. Abay & Mehari H. Abay & Mulubrhan Amare & Guush Berhane & Ermias Aynekulu, 2022. "Mismatch between soil nutrient deficiencies and fertilizer applications: Implications for yield responses in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 53(2), pages 215-230, March.
    7. Shamdasani, Yogita, 2021. "Rural road infrastructure & agricultural production: Evidence from India," Journal of Development Economics, Elsevier, vol. 152(C).
    8. B Kelsey Jack, "undated". "Market Inefficiencies and the Adoption of Agricultural Technologies in Developing Countries," CID Working Papers 50, Center for International Development at Harvard University.
    9. Squicciarini, Mara & Juhász, Réka & Voigtländer, Nico, 2020. "Technology Adoption and Productivity Growth: Evidence from Industrialization in France," CEPR Discussion Papers 14970, C.E.P.R. Discussion Papers.
    10. Michelson, Hope & Gourlay, Sydney & Lybbert, Travis & Wollburg, Philip, 2023. "Review: Purchased agricultural input quality and small farms," Food Policy, Elsevier, vol. 116(C).
    11. Michael Bernardi & Christa Hainz & Paulina Maier & Maria Waldinger, 2023. "Eine „Grüne Revolution“ in Subsahara-Afrika? Herausforderungen und Chancen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 76(05), pages 29-33, May.
    12. Dominik Naeher, 2022. "Technology Adoption Under Costly Information Processing," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 699-753, May.
    13. Bird, Samuel S. & Carter, Michael R. & Lybbert, Travis J. & Mathenge, Mary & Njagi, Timothy & Tjernström, Emilia, 2022. "Filling a niche? The maize productivity impacts of adaptive breeding by a local seed company in Kenya," Journal of Development Economics, Elsevier, vol. 157(C).
    14. Annemie Maertens & Hope Michelson & Vesall Nourani, 2021. "How Do Farmers Learn from Extension Services? Evidence from Malawi," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 569-595, March.
    15. Matsumoto, Tomoya, 2014. "Disseminating new farming practices among small scale farmers: An experimental intervention in Uganda," Journal of the Japanese and International Economies, Elsevier, vol. 33(C), pages 43-74.
    16. David Atkin & Azam Chaudhry & Shamyla Chaudry & Amit K. Khandelwal & Eric Verhoogen, 2017. "Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1101-1164.
    17. Esther Gehrke, 2019. "An Employment Guarantee as Risk Insurance? Assessing the Effects of the NREGS on Agricultural Production Decisions," The World Bank Economic Review, World Bank, vol. 33(2), pages 413-435.
    18. Keiko Fukumori & Ayumi Arai & Tomoya Matsumoto, 2022. "Risk Management for Smallholder Farmers: An Empirical Study on the Adoption of Weather-Index Crop Insurance in Rural Kenya," Working Papers 230, JICA Research Institute.
    19. Emerick, Kyle & Kelley, Erin & De Janvry, Alain & Sadoulet, Elisabeth, 2019. "Endogenous Information Sharing and the Gains from Using Network Information to Maximize Technology Adoption," CEPR Discussion Papers 13507, C.E.P.R. Discussion Papers.
    20. Kazushi Takahashi & Rie Muraoka & Keijiro Otsuka, 2020. "Technology adoption, impact, and extension in developing countries’ agriculture: A review of the recent literature," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 31-45, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:deveco:v:155:y:2022:i:c:s030438782100081x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/devec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.