Abstract
We measure and compare agricultural total factor productivity (TFP) growth and its components (efficiency and technical change) in China and India and test the TFP series for the existence of structural breaks relating the evolution of TFP to policy milestones. Our results show that agricultural TFP growth accelerates in China after 1979 and in India after 1974, although China’s agricultural sector clearly outperforms India’s. The main explanation of these differentials is that agricultural growth in China benefited from more fundamental institutional and policy reforms in agriculture than India. There is some evidence that the transformation of industry in China was also important for agricultural TFP growth. Manufacture growth absorbed labor and reduced employment in agriculture, creating incentives for capital investment and technical change that kept output per worker in agriculture growing at high rates. Fewer changes in agricultural policies and in the dynamics of manufacturing in India resulted in slower growth in agricultural productivity, despite policy changes that accelerated economic growth in recent years.
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Notes
See for the case of India: Bhushan (2005), Dholakia and Dholakia (1993), Evenson et al. (1999), Evenson and McKin (1991), Fan et al. (1999), Janaiah et al. (2006), Kaur and Sekhon (2005), Kumar et al. (2004), Mahadevan (2003), Murgai (2001), Roy and Pal (2002), Upender (2005).
For China: Brummer et al. (2006), Carter et al. (2003), Chen and Ding (2007), Fan and Zhang (2002), Jin et al. (2002), Kalirajan et al. (1996), Liu and Wang (2005), Mao and Koo (2002), Mead (2003), Wang and Kalirajan (2002), Wen (1993), Wu et al. (2001) and Zhang and Carter (1997).
This process was disrupted by political campaigns that had a negative impact on the economy such as the Great Leap Forward (1958) and the Cultural Revolution (1966–1976).
The sample of countries used to determine the PPS in this study includes countries from East, South and Southeast Asia, North Africa and the Middle East, Europe, North and Latin America, and Oceania. No Sub-Saharan African countries with the exception of South Africa are included given that the use of inputs of many of these countries is quite different from that in countries of other regions. In this way we try to reduce the likelihood of having outliers in the PPS that can affect productivity measures for China and India.
Animals can contribute in different ways to agricultural production: breeding stock, traction, fertilizer, store of wealth and they could also be output. Although animals that are considered part of the output in a particular year should not be included in the measure of animal stock, the information provided by FAO is not enough to properly separate these categories. For this reason we use FAO’s animal stock as a proxy for capital invested in livestock production, which has been used extensively in the literature following the paper by Hayami and Ruttan (1970) who used animal stock and land as proxy variables of internal resource accumulation in agriculture, and assumed that service flows from a source are proportional to its stock. Studies using similar approach are Kawagoe and Hayami (1985), Trueblood and Coggins (2003), Mundlak and Hellinghausen (1982), and most papers using the DEA Malmquist approach (e.g., Coelli et al. (2005), Arnade (1998), Fulginiti and Perrin (1998)). Some of these papers include poultry in the livestock measure and most of them include pigs. In this version of the paper animal stock includes cattle, buffalos, sheep, goats and pigs.
A regression of the log of the cumulative TFP index against a trend shows that TFP growth is significantly different from zero at the 1% level in both countries.
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Acknowledgments
Paper prepared for the International Agricultural Productivity Growth Workshop organized by ERS/USDA on March 15, 2007. Alejandro Nin-Pratt*, Bingxin Yu, and Shenggen Fan are research fellow, postdoctoral fellow, and the Director, respectively, Development Strategy and Governance Division, International Food Policy Research Institute, Washington DC.
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Nin-Pratt, A., Yu, B. & Fan, S. Comparisons of agricultural productivity growth in China and India. J Prod Anal 33, 209–223 (2010). https://doi.org/10.1007/s11123-009-0156-4
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DOI: https://doi.org/10.1007/s11123-009-0156-4