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Effect of infrastructure investments on total factor productivity (TFP) in Brazilian agriculture

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  • Mendes, Sergio Magno
  • Teixeira, Erly Cardoso
  • Salvato, Marcio Antonio

Abstract

Since the 1980s, the investments in infrastructure have been significantly reduced, jeopardizing Total Factor Productivity (TFP) and competitiveness of Brazilian agriculture. The Solow growth model with panel data is used to estimate TFP. An adaptation of the Zhang and Fan (2004) model for India, using the Generalized Method of Moments (GMM), is applied to study the effects of infrastructure investments on TFP. The lack of such investments in Brazil caused the effects to be larger and with lag periods smaller than in other countries. These investments affect TFP in the first years, and the study suggests that the return occurs in the period from zero to two years. Among the analyzed infrastructure elements, investments in roads have the greatest impact on TFP, followed by research, telecommunications, irrigation and electricity.

Suggested Citation

  • Mendes, Sergio Magno & Teixeira, Erly Cardoso & Salvato, Marcio Antonio, 2008. "Effect of infrastructure investments on total factor productivity (TFP) in Brazilian agriculture," Working Papers in Applied Economics 53441, Universidade Federal de Vicosa, Departamento de Economia Rural.
    • Handle: RePEc:ags:ufvdwp:53441
    DOI: 10.22004/ag.econ.53441
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    1. Xiaobo Zhang & Shenggen Fan, 2004. "How Productive Is Infrastructure? A New Approach and Evidence from Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 492-501.
    2. Ferreira, Pedro Cavalcanti & Issler, João Victor, 1995. "Growth, increasing returns, and public infrastructure : time series evidence," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 258, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    3. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    4. Jerry Hausman, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    5. Canning, David, 1999. "Infrastructure's contribution to aggregate output," Policy Research Working Paper Series 2246, The World Bank.
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    Cited by:

    1. Ignacio Lozano-Espitia & Lina Ma. Ramírez-Villegas, 2016. "How Productive is Rural Infrastructure? Evidence on Some Agricultural Crops in Colombia," Borradores de Economia 948, Banco de la Republica de Colombia.
    2. Steven Block, 2014. "The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa since 1961," NBER Chapters, in: African Successes, Volume IV: Sustainable Growth, pages 13-67, National Bureau of Economic Research, Inc.
    3. Levy, Stephanie & Robinson, Sherman, 2014. "Can cash transfers promote the local economy? A case study for Cambodia:," IFPRI discussion papers 1334, International Food Policy Research Institute (IFPRI).

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