Productivity growth and the effects of R&D in African agriculture

Abstract

This article measures and compares total factor productivity growth in African agriculture under contemporaneous and sequential technology frontiers over the period 1970–2004. The sources of productivity growth are examined using a fixed-effects regression model and a polynomial distributed lag structure for agricultural R&D expenditures. While conventional estimates show an average productivity growth rate of only 0.3% per year, the improved measures under sequential technology show that African agricultural productivity grew at a higher rate of 1.8% per year. Technical progress, rather than efficiency change, was the principal source of productivity growth. Agricultural R&D, weather, and trade reforms turned out to have significant effects on productivity in African agriculture. With a rate of return of 33% per year, R&D is shown to be a socially profitable investment in African agriculture. While a strong R&D expenditure growth of about 2% per year in the 1970s led to strong productivity growth after the mid 1980s, stagnation of R&D expenditure in the 1980s and early 1990s led to slower productivity growth in the 2000s. Consistent with recent economic recovery in Africa evidenced by stronger agricultural GDP growth rates, results showed that policy reforms as well as improved weather contributed to the recovery of agricultural productivity after the mid 1980s