Sources of Technical Efficiency: The Roles of Modernization and Information

Abstract

A major goal of agricultural policy in many developing nations is the improvement of farm management. Economists have treated aspects of this issue in the literature on technical and allocative efficiency, but much of the work has focused almost entirely on devising techniques for quantifying efficiency differentials. This paper takes the next logical step and attempts to identify sources of such differentials. A simple model is presented relating technical efficiency to general modernization and agricultural information. All three variables are measured among a sample of cotton farmers in Tanzania. Correlation analysis and estimates of modified Cobb-Douglas production functions seem to indicate that general modernization is the more important causal factor and that its impact is primarily labor-augmenting. The note appended to this paper demonstrates that when management is omitted from a Cobb-Douglas production function the direction of bias in estimated returns to scale depends on the manner in which management enters the "true" function. Griliches' [1957] seminal article on this topic implicitely assumes a particular specification that leads to negative bias, whereas alternate, perhaps more appealing, specifications may yield opposite results.

Resource Use Efficiency of Tea Production in Vietnam: Using Translog SFA Model

“…Hence, most tea farmers still depend on their conventional methods for farming. Furthermore, when farmers cultivate their crops with the existing technology inefficiently, applying new technologies is less cost-effective than using the existing technology (Belbase & Grabowki, 1985;Shapiro, 1977). As such Vietnamese tea productivity should be increased by using the existing resources efficiently.…”

Technical, Economic, and Allocative Efficiency in Peasant Farming: Evidence From the Dominican Republic

“…An important policy implication stemming from significant levels of inefficiency is that it might be more cost effective to achieve short-run increases in farm output, and thus income, by concentrating on improving efficiency rather than on the introduction of new technologies (Belbase and Grabowski 1985;Shapiro and Müller 1977). The general objective of this paper is to assess the possibilities for productivity gains by improving the efficiency of small-scale agriculture in the Dajabon region of the Dominican Republic.…”

Productive Efficiency of Soybean Production in the Mekong River Delta of Vietnam

“…Economic efficiency involves increasing output without using more than conventional inputs. The use of existing technologies is more cost-effective than applying new technologies if farmers currently cultivate their products with the existing technology inefficiently (Belbase & Grabowski, 1985;Shapiro, 1977). Economic efficiency can be classified into two categories: technical efficiency and allocative efficiency.…”

“…Economic efficiency can be classified into two categories: technical efficiency and allocative efficiency. Technical efficiency measures the ability of a farmer to achieve maximum output with given and obtainable technology, while allocative efficiency tries to capture a farmer's ability to apply the inputs in optimal proportions with respective prices (Farrell, 1957;Shapiro, 1977;Tim et al, 2005). In Fig.…”

“…A policy mainly focusing on more efficiency in production is considered as using more efficient inputs, increasing outputs and then improving income. In the short-term, improvement in agricultural production with preexisting technologies is better than the implementation of new technologies (Belbase & Grabowski, 1985;Shapiro, 1977). The main objective of this study is to measure the possibilities of productivity gains from enhancing the efficiency of soybean farmers in the MRD of Vietnam.…”