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Relative Prices and the International Comparison of Real Agricultural Output and Productivity

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  • Massoud Karshenas

    (Department of Economics, SOAS-School of Oriental & African Studies , University of London)

Abstract

This article reviews the different methods of constructing multilateral output and productivity indices for agriculture in cross-country panel studies. We show that various multilateral output indices used by different researchers can have considerable disparities, thus rendering the comparison of the final results problematic. The production indices produced by the Food and Agricultural Organization of the United Nations (FAO) are increasingly used by researchers as a unique source of data for cross-country panel studies. The paper examines the properties of the FAO index, and finds them deficient in paying little attention to the problem of loss of characteristicity in a highly heterogeneous panel. It is shown that the FAO production indices lead to unacceptably large deviations from domestically based production indices in the case of low-income countries. It is argued further that the use of the FAO production index can lead to spurious results in econometric studies of the links between productivity growth, per capita income, and price levels.

Suggested Citation

  • Massoud Karshenas, 2000. "Relative Prices and the International Comparison of Real Agricultural Output and Productivity," Working Papers 2002, Economic Research Forum, revised 01 2000.
    • Handle: RePEc:erg:wpaper:2002
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    References listed on IDEAS

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    1. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    2. Kawagoe, Toshihiko & Hayami, Yujiro & Ruttan, Vernon W., 1985. "The intercountry agricultural production function and productivity differences among countries," Journal of Development Economics, Elsevier, vol. 19(1-2), pages 113-132.
    3. Lau, Lawrence J. & Yotopoulos, Pan A., 1989. "The meta-production function approach to technological change in world agriculture," Journal of Development Economics, Elsevier, vol. 31(2), pages 241-269, October.
    4. Steven A. Block, 1994. "A New View of Agricultural Productivity in Sub-Saharan Africa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 619-624.
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    Cited by:

    1. Toseef Azid & Mohammad Aslam & Mohammad Omer Chaudhry, 2002. "Transfer of Technology: Competition or Cooperation," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 41(4), pages 761-786.

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