Agricultural Investment and Productivity in Developing Countries

Topic :

The purpose of this book is to investigate the relationship between agricultural investment and productivity in developing countries. Investment is viewed as an important aspect to enhance agricultural productivity, and the key to promoting long-term growth. Although technology and policy are other important long-term factors, the book focuses on investment because public, private and international investments are declining. Low levels of investment in agriculture bode poorly for long-term prospects of achieving food security in the developing world. A growing agricultural sector contributes to overall growth and improved food security in developing countries where the agricultural sector provides livelihood directly and indirectly to a significant portion of the population, especially in rural areas, where poverty is more pronounced. Hence, improving the production capacity of agriculture in developing countries through productivity increases is a critical component of improved food security. The objective of this book is to provide an understanding of the linkages between agricultural investment and productivity where agricultural investment includes not only investments in physical capital but in human and social capital as well as natural resources.

The book reviews studies investigating the relationship between investment and productivity, as well as highlights some new findings, methodology and data issues. The book is divided into three sections. The first section focuses on the methods developed and overall findings about the relationship between investment and productivity. Special emphasis is placed on a methodology for incorporating agricultural natural resource depletion in calculating measures of growth. The first paper, Agricultural Investment, Production Capacity and Productivity, by Zepeda, provides an overview of the terminology, different methods used in the analysis of measurement of productivity and a review of the productivity literature. This provides background and context for the subsequent papers. Paper 2, An International Analysis of Agricultural Productivity, by Chavas, is an international comparison of agricultural productivity of selected countries from 1961 to 1994. A non-parametric method is used to illustrate how this approach can be used with both cross-section and time-series data. Paper 3, Agricultural Productivity and Natural Resource Depletion, by Lee and Zepeda, presents a model that incorporates natural resource depletion. Until now, models of productivity measurement have not taken this into account even though many economists recognize the importance of environmental disinvestment. The paper outlines a methodology for incorporating this analysis as well as data needs.

Overall the book provides an overview of current thinking and findings about the relationship between agricultural investment and productivity. This includes theoretical and methodological developments, such as incorporating natural resource depletion. It also underlines, through the concerns expressed by many authors about data scarcity and limitations, that neglect of information needs hampers the forward-looking assessment of sustainability of agricultural and rural development. The book also reviews findings about the linkages of investment and productivity in the context of other important factors such as land policy, debt, civil unrest and structural adjustment programmes. This places agricultural investment solidly as a crucial but integral component of an overall policy to promote agricultural productivity.

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