Six Decades of Total Factor Productivity Change and Sources of Growth in Bangladesh Agriculture (1948–2008)
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This study applies the Färe–Primont index to calculate total factor productivity (TFP) indices for agriculture in 17 regions of Bangladesh covering a 61-year period (1948–2008). It decomposes the TFP index into six finer components (technical change, technical-, scale- and mix-efficiency changes, residual scale- and residual mix-efficiency changes). Results reveal that TFP grew at an average rate of 0.57% p.a. led by the Chittagong, Rajshahi, Rangpur, Dinajpur and Noakhali regions. TFP growth is largely powered by technological progress estimated at 0.74% p.a. Technical efficiency improvement is negligible (0.01% p.a.) due to stagnant efficiency in most of the regions. Decline in scale efficiency is also negligible (0.01% p.a.), but the decline in mix efficiency is high at 0.19% p.a. Decomposition of the components of TFP changes into finer measures of efficiency corrects the existing literature’s blame of a decline in technical efficiency as the main cause of poor TFP growth in Bangladesh. Among the sources, farm size, R&D investment, extension expenditure and crop specialisation positively influenced TFP growth, whereas the literacy rate had a negative influence on growth. Policy implications include encouraging investment in R&D and extension, land reform measures to increase average farm size, promotion of Green Revolution technology and crop diversification.
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