Assessing Agricultural Green Total Factor Productivity in Latin America

Abstract

The agricultural sector in Latin America plays a vital role in ensuring food security while impacting the environment. However, there remains a lack of analysis regarding the inputs responsible for pollution within its sub‐technologies. Hence, this article aims to assess agricultural green total factor productivity (TFP) through a novel decomposition of the Luenberger–Hicks–Moorsteen (LHM) indicator. Utilizing panel data from 23 Latin American countries covering the period from 2000 to 2019, our study reveals that green TFP has achieved a consistent annual growth rate of 0.71%. Specifically, technical efficiency change (TEC) accounts for 0.26% of the TFP, with the technical change component (TP) and scale efficiency change (SEC) contributing 0.74% and 0.30%, respectively. These findings suggest that Latin American countries have increasingly utilized agricultural inputs more efficiently over time. The results provide valuable insights for developing innovative measures and effective policy strategies to promote sustainability in the agricultural sector.