Machines and Exports: Do They Complement or Counteract Agricultural Productivity?

This study examines the impact of agricultural mechanization, food exports, per capita income, and human capital development on agricultural productivity. Utilizing panel data from 55 developing countries covering the period 2000–2019, the analysis employs the AMG and CCE-MG estimation techniques, accounting for heterogeneity and cross-sectional dependence. The findings reveal that agricultural mechanization, contrary to expectations, has a negative impact on productivity. This may be attributed to inadequate infrastructure, limited financial access, and smallholder farmers' difficulties in adopting new technologies. In contrast, per capita income positively influences agricultural productivity, indicating that economic growth facilitates the adoption of modern agricultural practices. Food exports also enhance productivity, though excessive reliance on external markets may introduce risks related to price volatility and food security. The effect of human capital (education) presents a more complex picture; while higher education levels are generally associated with increased efficiency, they may also drive the rural workforce to shift to non-agricultural sectors. This underscores the need for education systems to incorporate agricultural-specific skills and technological training. These findings highlight the necessity of a comprehensive policy framework to enhance agricultural productivity in developing economies.