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The total factor productivity in China and India: new measures and approaches

The total factor productivity in China and India: new measures and approaches Purpose – This paper aims to measure and compare agricultural total factor productivity (TFP) growth in China and India and relates TFP growth in each country to policy milestones and investment in agricultural research. Design/methodology/approach – TFP is measured using a non‐parametric Malmquist index which allows the decomposition of TFP growth into its components: efficiency and technical change. Findings – Comparing TFP growth in China and India it is found that efficiency improvement played a dominant role in promoting TFP growth in China, while technical change has also contributed positively. In India, the major source of productivity improvement came from technical change, as efficiency barely changed over the last three decades, which explains lower TFP growth than in China. Agricultural research has significantly contributed to improve agricultural productivity in both China and India. Even today, returns to agricultural R&D investments are very high, with benefit/cost ratios ranging from 20.7 to 9.6 in China and from 29.6 to 14.8 in India. Originality/value – The applied methodology and the comparison between TFP growth patterns contribute to a better understanding of the consequences that the different approaches to agricultural reform followed by China and India had on the performance of agriculture in both countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Agricultural Economic Review Emerald Publishing

The total factor productivity in China and India: new measures and approaches

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Publisher
Emerald Publishing
Copyright
Copyright © 2009 Emerald Group Publishing Limited. All rights reserved.
ISSN
1756-137X
DOI
10.1108/17561370910915339
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to measure and compare agricultural total factor productivity (TFP) growth in China and India and relates TFP growth in each country to policy milestones and investment in agricultural research. Design/methodology/approach – TFP is measured using a non‐parametric Malmquist index which allows the decomposition of TFP growth into its components: efficiency and technical change. Findings – Comparing TFP growth in China and India it is found that efficiency improvement played a dominant role in promoting TFP growth in China, while technical change has also contributed positively. In India, the major source of productivity improvement came from technical change, as efficiency barely changed over the last three decades, which explains lower TFP growth than in China. Agricultural research has significantly contributed to improve agricultural productivity in both China and India. Even today, returns to agricultural R&D investments are very high, with benefit/cost ratios ranging from 20.7 to 9.6 in China and from 29.6 to 14.8 in India. Originality/value – The applied methodology and the comparison between TFP growth patterns contribute to a better understanding of the consequences that the different approaches to agricultural reform followed by China and India had on the performance of agriculture in both countries.

Journal

China Agricultural Economic ReviewEmerald Publishing

Published: Sep 26, 2008

Keywords: China; Productivity rate; India; Agriculture

References