The Equilibrium Impact of Agricultural Risk on Intermediate Inputs and Aggregate Productivity

2020 ◽  
Author(s):  
Kevin Donovan
Keyword(s):  
Developing Countries ◽  
Incomplete Markets ◽  
Agricultural Sector ◽  
Aggregate Productivity ◽  
Agricultural Labor ◽  
Agricultural Risk ◽  
Intermediate Inputs ◽  
Idiosyncratic Shocks ◽  
Agricultural Labor Productivity ◽  
Cross Country

Abstract I consider the aggregate impact of low intermediate input intensity in the agricultural sector of developing countries. In a dynamic general equilibrium model with idiosyncratic shocks, incomplete markets, and subsistence requirements, farmers in developing countries use fewer intermediate inputs because it limits their exposure to uninsurable shocks. The calibrated model implies that Indian agricultural productivity would increase by 16 percent if markets were complete, driven by quantitatively important increases in both the average real intermediate share and measured TFP through lower misallocation. I then extend the results to consider the importance of risk in other contexts. First, the introduction of insurance decreases cross-country differences in agricultural labor productivity by 14 percent. Second, scaling the introduction of improved seeds to decrease downside risk reduces inequality by reallocating resources from rich to poor farmers via equilibrium effects. This reallocation substantially increases aggregate productivity relative to what would be expected from extrapolating the partial equilibrium impact.

scholarly journals AGRICULTURAL CREDITS AND AGRICULTURAL PRODUCTIVITY: CROSS-COUNTRY EVIDENCE

2020 ◽  
Vol 65 (supp01) ◽  
pp. 161-183
Author(s):  
UNAL SEVEN ◽  
SEMIH TUMEN
Keyword(s):  
Developing Countries ◽  
Labor Productivity ◽  
Agricultural Production ◽  
Agricultural Productivity ◽  
Developed Countries ◽  
Agricultural Labor ◽  
Agricultural Finance ◽  
Development Path ◽  
Agricultural Labor Productivity ◽  
Cross Country

We present cross-country evidence suggesting that agricultural credits have a positive impact on agricultural productivity. In particular, we find that doubling agricultural credits generates around 4–5% increase in agricultural productivity. We use two different agricultural production measures: (i) the agricultural component of GDP and (ii) agricultural labor productivity. Employing a combination of panel-data and instrumental-variable methods, we show that agricultural credits operate mostly on the agricultural component of GDP in developing countries and agricultural labor productivity in developed countries. This suggests that the nature of the relationship between agricultural finance and agricultural output changes along the development path. We conjecture that the development of the agricultural finance system generates entry into the agricultural labor market, which pushes up the agricultural component of GDP and keeps down agricultural labor productivity in developing countries; while, in developed countries, it leads to labor-augmenting increase in agricultural production. We argue that replacement of the informal credit channel with formal and advanced agricultural credit markets along the development path is the main force driving the labor market response.

scholarly journals Impact of farm protectionism on the use of agricultural inputs in Chile

2019 ◽  
Vol 17 (1) ◽  
pp. e0107
Author(s):  
Gabriel Pino ◽  
Ariel Soto-Caro
Keyword(s):  
Developing Countries ◽  
Agricultural Production ◽  
Agricultural Sector ◽  
Interesting Case ◽  
Agricultural Labor ◽  
Working Capital ◽  
Agricultural Protectionism ◽  
The Government ◽  
The Impact ◽  
Over Time

Despite evidence highlighting the multiple benefits that liberalization can have in the agricultural sector, agricultural protectionism is abundant, especially in developing countries. Chile provides an interesting case on this topic because it implemented an aggressive liberalization in the agricultural sector during the 1970s and 1980s. This paper analyzes the impact of farm protectionism on the use of agricultural inputs in Chile. To do this, we estimated partial elasticities of substitution by incorporating government protectionism as a factor for agricultural production. Our findings reveal that increased protectionism decreases agricultural labor and promotes the use of fixed capital. In contrast, protectionism has no effect on the use of working capital and land. This information shows a clear transference from the government to farmers. Furthermore, our results are useful for anticipating the effects that varying levels of government protectionism can have on the Chilean agricultural sector over time.

scholarly journals The Labor Productivity Gap between the Agricultural and Nonagricultural Sectors, and Poverty and Inequality Reduction in Asia

2019 ◽  
Vol 36 (1) ◽  
pp. 112-135 ◽  
Author(s):  
Katsushi Imai ◽  
Raghav Gaiha ◽  
Fabrizio Bresciani
Keyword(s):  
Labor Productivity ◽  
Agricultural Sector ◽  
Urban Poverty ◽  
National Level ◽  
Agricultural Labor ◽  
Middle Income ◽  
Rural And Urban ◽  
Poverty And Inequality ◽  
Agricultural Labor Productivity ◽  
Productivity Gap

The objective of this paper is to examine how agricultural and nonagricultural labor productivities have grown over time and whether the growth pattern affected poverty in low- and middle-income economies in Asia. We first examine whether labor productivities in the agricultural and nonagricultural sectors have converged, finding evidence that they did not as the latter have grown faster. We then confirm that both agricultural and nonagricultural labor productivities have converged across economies and that the convergence effect is stronger for the nonagricultural sector. We have also observed that, despite the relatively slower growth in agricultural labor productivity, the agricultural sector played an important role in promoting nonagricultural labor productivity and thus in nonagricultural growth. Finally, we have found some evidence that the labor productivity gap reduces rural and urban poverty, as well as national-level inequality.

Economic Backwardness and the Characteristics of Development

1969 ◽  
Vol 29 (3) ◽  
pp. 449-472 ◽  
Author(s):  
Steven L. Barsby
Keyword(s):  
Economic Growth ◽  
Nineteenth Century ◽  
Agricultural Sector ◽  
Initial Period ◽  
Institutional Factors ◽  
Agricultural Labor ◽  
Rate Of Increase ◽  
Agricultural Labor Productivity ◽  
Rapid Industrialization ◽  
Manufacturing Growth

Alexander Gerschenkron has suggested that certain characteristics of development during a country's initial period of industrialization, or “great spurt,” can be better understood if reference is made to that country's degree of relative backwardness just prior to the spurt. Referring to the European countries which began their rapid industrialization during the nineteenth century, Gerschenkron stated that the greater a country's relative backwardness on the eve of its spurt (1) the more rapid was the subsequent rate of manufacturing growth, (2) the greater was the stress on bigness of the size of plant and enterprise, (3) the greater was the stress on producers’ goods as opposed to consumers’ goods, (4) the less rapid was the increase in the level of consumption, (5) the greater was the role played by special institutional factors designed to speed industrialization, and (6) the less the agricultural sector contributed to economic growth, as measured by the rate of increase in agricultural labor productivity.

scholarly journals Capital Obsolescence and Agricultural Productivity*

2020 ◽  
Vol 136 (1) ◽  
pp. 505-561
Author(s):  
Julieta Caunedo ◽  
Elisa Keller
Keyword(s):  
Labor Productivity ◽  
Productivity Growth ◽  
Agricultural Labor ◽  
Data Set ◽  
Agricultural Labor Productivity ◽  
Country Differences ◽  
Cross Country ◽  
Rich Countries ◽  
Price Differences ◽  
Do So

Abstract This article argues that accounting for capital-embodied technology greatly increases the importance of capital in explaining cross-country differences in agricultural labor productivity. To do so, we draw on a novel data set of agricultural capital prices. We document that new capital is more expensive in richer countries, both in absolute terms and relative to old capital. A model of endogenous adoption of capital of different quality links these price differences to the path of capital-embodied technology. In particular, our model recovers the level of embodied technology from the price of new capital and the growth rate of embodied technology from the price of new capital relative to old capital. We then measure the stocks of quality-adjusted capital in agriculture for a sample of 16 countries at different stages of development. We find that adjusting for differences in quality almost doubles the importance of capital in accounting for cross-country differences in agricultural labor productivity: from 21% to 37%. In addition, improvements in capital quality have been an important source of agricultural labor productivity growth over the past 25 years, accounting for 21% and 35% of the productivity growth in poor and rich countries, respectively.

scholarly journals More insurance subsidies for European farmers – is it needed?

2015 ◽  
Vol 9 (4) ◽  
pp. 33-38
Author(s):  
Anna Lóránt ◽  
Maria Farkasné Fekete
Keyword(s):  
Risk Management ◽  
Developing Countries ◽  
Agricultural Sector ◽  
Contingent Valuation Method ◽  
Market Price ◽  
Price Volatility ◽  
Jel Classification ◽  
Policy Outcomes ◽  
Agricultural Risk ◽  
Agricultural Insurance

In addition to traditional sources of uncertainties, such as market price volatility and animal and plant health-related risks, the impacts of climate change have recently become a major concern in the agricultural sector throughout the world. Insurance has been commonly proposed as a key instrument in farm risk management, and agricultural insurance schemes have become more widespread both in developed and developing countries. We conducted a case study in the UK to investigate farmers’ risk perception and willingness to pay for crop insurance by using contingent valuation method (CVM). Similarly to the experience from developing countries, we found that farmers are less willing to pay for insurance, however they do take actions to reduce their risks. While these results suggest that the provision of premium subsidies to European farmers can be justified; in order to avoid counter-productive policy outcomes, one may consider the introduction of a risk-based approach in agricultural risk management. JEL classification: Q14

scholarly journals The Gender Gap in Agricultural Productivity in Kyrgyzstan

2018 ◽  
Author(s):  
Burulcha Sulaimanova ◽  
Daniyar Jasoolov
Keyword(s):  
Labor Force ◽  
Gender Gap ◽  
Rural Areas ◽  
Agricultural Sector ◽  
Agricultural Productivity ◽  
Market Imperfections ◽  
Agricultural Labor ◽  
Regional Market ◽  
Agricultural Labor Productivity ◽  
Women In Agriculture

More than two third of total population of Kyrgyzstan are living in rural areas, and the agricultural sector of Kyrgyzstan employs nearly the half of labor force and have export oriented output production with over than 384 thousand peasant farms. The share of employed women in agriculture compromised the 44 % of total agricultural labor force. However the low economic efficiency and competitiveness of farmers in regional market, market imperfections in agriculture impedes the economic growth of this sector. This research aims to investigate gender gap in agricultural productivity among farm entrepreneurs in Kyrgyzstan. The agricultural labor productivity gap decomposed by various types of market imperfections, and empirically estimated by “Life in Kyrgyzstan” survey data for 2013 year.

scholarly journals Sustainable development for Vietnam agriculture

2020 ◽  
Vol 175 ◽  
pp. 01015
Author(s):  
Duc Tam Duong
Keyword(s):  
Agricultural Development ◽  
Agricultural Sector ◽  
Social Needs ◽  
Basic Material ◽  
Agricultural Labor ◽  
Service Sectors ◽  
Agricultural Labor Productivity ◽  
Land Policies ◽  
Simple Economic ◽  
Energy Plants

Agriculture is one of the important and complex sectors, it is not only a simple economic sector but also a biological - technical system. Because the basis for agricultural development is the use of bio-energy - plants and animals. Agricultural sector, if understood in a narrow sense, is only the cultivation, husbandry and service sectors. As for agriculture, in broad terms it also includes forestry and fishery. Agriculture provides food and food for social needs, agriculture is the basic material production industry, plays a major role in economic development in most of the country, especially in developing countries. At present, Vietnam’s agriculture has great potential and can be enriched from agriculture. However, wastage and loss in agriculture are still high in the stages of processing, harvesting and preserving. Mechanization is still low, lower than Thailand, so agricultural labor productivity is not high. Over the past years, Vietnam’s Agriculture has achieved important developments, contributing to the development of Vietnam’s economy. However, to achieve higher goals in the next 10 years, Vietnam’s agriculture needs to promote its strengths, such as: Well implementing land policies in agriculture; training high quality human resources; building a credible agriculture, which is clean, safe, quality agriculture and organic agriculture; protect natural environment, such as: land, climate, weather, hydrology, etc. In order to ensure sustainable agricultural development.

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