Agricultural Productivity Growth, Efficiency Change and Technical Progress in Latin America and the Caribbean

This paper analyses total factor productivity growth in agriculture and its subsectors in Latin America and the Caribbean between 1961 and 2007. To estimate productivity growth we use the Malmquist index, which is a non-parametric methodology that uses data envelopment analysis (DEA) methods. The results show that among developing regions, Latin America and the Caribbean shows the highest agricultural productivity growth, growing at an average rate of 1.9 percent, relative to a world average of 1.7 percent. The higher growth within the region has occurred in the last two decades, especially due to improvements in efficiency and the introduction of new technologies. This result denotes convergence of the region to productivity levels of developed countries such as the United States. Country level results within the region are very heterogeneous. However, land abundant countries such as Argentina, Chile and Colombia consistently outperform land constrained countries such as Central American and Caribbean countries (except for Costa Rica). Within agriculture, crops and non-ruminant sectors have shown the strongest growth between 1961 an 2001 with average growth rates of 0.8 and 2 percent, respectively. Ruminant production has performed the worst with 0.1 percent average growth. We further analyze the cases of Brazil and Cuba to show how policies and external shocks can influence agricultural productivity. These case studies show that policies that do not discriminate the agricultural sectors and that remove price and production distortions may help improve productivity growth in agriculture.