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

Tractors

Labor Quality

Labor Quantity

Chemical inputs

Technology

AgriculturaAgricultural Growthl Growth

Land

Random factors

Livestock

Forest clearing

Population growth

Cash investment

Extension

Climate, disasters, conflicts …

Cash investment

Heads

Research

What drive me ?

Data Used

Panel 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)

Nigeria

CameroonGhanaIvory

coast

BurkinaFaso

Mali

Senegal

Uganda

ZimbabweMozambique

Angola

Madagascar

DR Congo

Algeria

Morocco

Egypt

Sudan

Tunisia

ChadNiger

Tanzania

Malawi

Kenya Rwanda

Burundi

Guinea

Visualisation

Frontier 1

X1 X2

P2

P1

X (Input)

Y(Output)

A

P4 A1

Frontier 2

B

break down the growth rate in neo-classical production function

• We first consider the following Solow neo-classical production function:

Jj

Tt

nitxfQ ititjit

,.....,1

,.....,1

,.....,1);,(ln

• 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.

• Where dots over variables indicate rate of change

ititj

jitjit TFPxQ

1

1

t

ttt

X

XXX

• and αitj is the output elasticity of input j, for country i in time t. j

j x

txf

);,(

Agricultural Growth

Productivity Growth

EfficiencyGrowth

Technical Growth

Scale Efficiency

Pure Technical Efficiency

AassumedisCRS

xyd

xyd

sss

ttt

,

,

0

0

BassumedisVRS

xyd

xyd

sss

ttt

,

,

0

0

21

0

0

0

0

0

0

,

,

,

,

,

,

sst

sss

ttt

tts

sss

ttt

xyd

xyd

xyd

xyd

xyd

xyd

B

A

21

0

0

0

0

,

,

,

,

sst

sss

ttt

tts

xyd

xyd

xyd

xyd

TFP derivation: Malmquist Index Method

Four distance functions to compute

,0

'0

0

,)],([ ,1

0

tit

tit

ttt

Xx

Yytosubjet

Maxyxd

,0

'0

0

,)],([

11,

11,

,1

111

0

tti

tti

ttt

Xx

Yytosubjet

Maxyxd

,0

'0

0

,)],([

1,

1,

,1

110

tti

tti

ttt

Xx

Yytosubjet

Maxyxd

,0

'0

0

,)],([

1

1

,11

0

tit

tit

ttt

Xx

Yytosubjet

Maxyxd

• Distance from production point of t+1 to technology in period t

• Distance from production point of t+1, to technology in period t+1

• Distance from production point of t, to technology in period t

• Distance from production point of t to technology in period t+1

Yearly agricultural growth by decade in Africa (%)

1.43

3.033.53

2.71

00.5

11.5

22.5

33.5

4

1971-80 1981-90 1991-00 All (1971-00)

Yearly agricultural growth by region in Africa, 1971-00 (%)

3.243.45

1.68

2.04

2.53

0

0.5

1

1.5

2

2.5

3

3.5

Northern West Central East Southern

Growth decomposition

Agricultural growth

Land,Labor,

Fertilizer,Tractors,

….

Technological change

(research)

Conflict,Climate,Natural disaster

……

Technical efficiency

(extension)

Physical factors

ProductivityUnaccounted

factors

Agricultural growth contributors, 1971-00 (%)

98

67

-65-80

-60

-40

-20

0

20

40

60

80

100

Physical factors Productivity Unaccounted factors

Agricultural growth contributors by decade (%)

-100

-50

0

50

100

150

1971-80 113.88 -45.11 31.23

1981-90 48.33 86.14 -34.47

1991-00 92.04 91.36 -83.39

Physical factors Total factor productivity Unaccounted factors

Agricultural growth contributors by region (%)

-400

-300

-200

-100

0

100

200

300

Physical factors 66.92 48.53 262.2 270.58 176.27

Total factor productivity 64.27 42.73 66.43 136.61 48.6

Unaccounted factors -31.18 8.74 -228.64 -307.2 -124.87

Northern Western Central East Southern

Contribution of physical inputs in the agricultural growth, 1971-00 (%)

4

21 25

51

-4

-10

0

10

20

30

40

50

60

Land Labor Tractor Fertilizer Livestock

Contribution of physical inputs in the agricultural growth by region, 1971-00 (%)

-50

0

50

100

150

200

Northern West Central East Southern

LandLaborTractorFertilizer

Implications for R4D

98

67

-65-80-60-40-20

0204060

80100

Physical factors Productivity Unaccounted factors

Technological change

(research)

Technical efficiency

(research/extension)

Technology or

Efficiency ?

Technology Gap and Productivity difference in African Agriculture

Input, x

Output Y

Meta frontier

YS.A

YC.A

Northern Africa frontier

Southern Africa frontier

Central Africa frontier

YW.A

Westtern Africa frontier

YE.A

Eastern Africa frontier

YN.A

Input, x

Output Y

Meta frontier

YS.A

YC.A

Northern Africa frontier

Southern Africa frontier

Central Africa frontier

YW.A

Westtern Africa frontier

YE.A

Eastern Africa frontier

YN.A