DISENTANGLING THE SOURCES OF GROWTH.Land, Labor, Fertilizer, Tractor, Research, Extension…… what are their exact contributions to agricultural growth in Africa: Lesson from macro-data. Guy B. Nkamleu
African growth tragedy• Africa’s growth performance continues to challenge our understanding. – With the African population expected to grow at 2.8% per annum, simply preventing an increase in the number of Africa’s absolute poor will require an annual growth of at least 5%, almost twice the level achieved since 1973.• Growth in agriculture, particularly in Africa, has been strongly tied to overall economic growth and poverty reduction – Recent studies show that for African countries, a 10% increase in agricultural yield leads to a 9% decrease in the percentage of those living on less than US $1.00 a day.
African growth tragedy• Why some countries achieve rapid economic growth and some other countries experience stagnation and even economic regression ? – This has led researchers to examine the main sources of growth for different countries and regions of the world.• Efforts to understand that should be to first, explore the driving forces of economic growth……. In the case of Africa, attention should focus on sources and driving forces of agricultural growth.
• AIMS: Investigate sources and determinants of agricultural growth in Africa. – The focus is on quantifying: • how much growth in agricultural output is associated with growth in physical capital, • how much is due to technology, • how much is due to productivity improvement, • how much is due to institutional change and other factors.
Potential sources of Ag. Growth LandChemical inputs What drive me ?Labor QuantityLabor Quality Extension Agricultura l Growth Tractors Livestock TechnologyRandom factors
Data UsedPanel Data (1970-2000) on the agricultural sector of each country…. (FAOSTAT). These data included: • value of the Agricultural production, • agricultural labor, • number of tractors in use, • quantity of fertilizer used, • agricultural land, • number of livestock in sheep-equivalent.
Data: Sampled Countries• Top 26 African agricultural producers (except South Africa Republic) Morocco Tunisia Algeria Egypt Mali Niger Senegal Chad Burkina Sudan Faso Guinea Nigeria Ivory Ghana coast Cameroon Uganda Kenya Rwanda DR Congo Tanzania Burundi Malawi Angola Madagascar Mozambique Zimbabwe
Visualisation Y(Output) Frontier 2 P4 A1 Frontier 1P2 BP1 A X (Input) X1 X2
break down the growth rate in neo-classical production function • We first consider the following Solow neo-classical production function: ln Qit f ( xitj , t; ) it i 1 ,.....,n t 1 ,.....,T j 1 ,.....,J• Growth accounting analysis generally assumes that the residual of this production function captures total factor productivity (TFP) growth. The break down of the growth rate of the aggregate output is given by. Q it itj x itj TFPit j Xt Xt 1• Where dots over variables indicate rate of change Xt Xt 1 f ( x, t ; )• and αitj is the output elasticity of input j, for country i in j xj time t.
TFP derivation: Malmquist Index Method t d 0 yt , xt VRS is assumed B d 0s ys , xs Pure Technical Efficiency td 0 yt , xt CRS is assumed Ad 0s ys , xs Efficiency Growth Scale EfficiencyAgricultural Productivity Growth Growth A B 12 Technical t s sd y t , xt 0 d y t , xt d y s , x s 0 0 Growth 12 sd y s , xs t t d y t , xt d y s , x s d 0s yt , xt d 0s y s , x s 0 0 0 t t d 0 y t , xt d 0 y s , x s
Four distance functions to compute t 1[d 0 ( xt , y t )] Max , ,subjet to y it Yt 0 • Distance from production point of t, to technology in period t xit Xt 0 0,[d 0 1 ( xt 1 , y t 1 )] t 1 Max , ,subjet to y i ,t 1 Yt 1 0 • Distance from production point of t+1, to technology in period t+1 x i ,t 1 Xt 1 0 0, t 1[d 0 ( xt 1 , y t 1 )] Max , ,subjet to y i ,t 1 Yt 0 • Distance from production point of t+1 to technology in period t x i ,t 1 Xt 0 0,[d 0 1 ( xt , y t )] t 1 Max , ,subjet to y it Yt 1 0 • Distance from production point of t to technology in period t+1 xit Xt 1 0 0,
Yearly agricultural growth by decade in Africa (%) 4 3.53 3.5 3.03 2.71 3 2.5 2 1.43 1.5 1 0.5 0 1971-80 1981-90 1991-00 All (1971-00)
Yearly agricultural growth by region in Africa, 1971-00 (%) 3.45 3.5 3.24 3 2.53 2.5 2.04 2 1.68 1.5 1 0.5 0 Northern West Central East Southern
Technology Gap and Productivity difference in African Agriculture Central Africa frontier Meta frontier Westtern Africa frontierOutput Y YC.A Eastern Africa frontier Northern Africa frontier Southern Africa frontier YW.A YN.A YE.A YS.A Input, x