Agricultural Economics Department



Richard K. Perrin

Date of this Version



Revised version of a paper presented at the Western Economic Association International Conference, Seattle, July 12,1997, in a session organized by D. Stiegel, University of Arizona.
Published in Contemporary Economic Policy (ISSN 1074-3529), Vol. 17. No. 4. October 1999, 469-475 Copyright Western Economic Association International 1999. Used by permission.


This paper examines price policies and agricultural productivity in 18 developing countries over the period 1961—1985. We measure productivity with both a nonparametric Malmquist index and a production function, confirming previous findings of declining agricultural productivity, but with sufficient inconsistencies as to raise concern about the adequacy of the methods. We nonetheless find considerable support for the hypothesis that unfavorable price policies have damaged agricultural productivity performance in these countries.
Beginning in the mid 1960s and continuing into the 1980s the "green revolution" swept across the agricultural sectors of many less developed countries (LDCs), a revolution consisting of new varieties of wheat, rice, and maize that could make use of fertilizer and irrigation water without succumbing to diseases and pests. This revolution contributed to dramatic increases in foodgrain production, particularly in southeast Asia. Yet some previous studies have shown agricultural productivity to be declining in these countries during this period. One possible explanation is that the widespread policy of heavy taxation of the agricultural sector may have so discouraged innovation and efficiency gains that the effects of the green revolution were not fully realized. Another possible explanation is that the available methods of measuring productivity in these countries are somehow inappropriate. This study examines some of the evidence with respect to these two hypotheses.