Fostering Productivity and Competitiveness in Agriculture
This report reviews economic concepts of innovation, research and development (R&D), productivity and competitiveness, and their linkages. It then discusses evidence on developments in productivity and competitiveness in the agricultural and food processing sectors and on the relationship between agricultural productivity and farm size, factor intensity, farm specialisation, human capital, consumer demand, the natural environment, investments in general infrastructures and R&D, regulations, and agricultural policies. It describes developments in public and private investments in agricultural R&D and outlines their positive impact on productivity growth. Finally, it suggests an “innovation systems” approach would help understand better how innovation translates into productivity growth.
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The evidence on agricultural productivity growth and competitiveness
In the last decade, agricultural productivity growth has decreased in many high level countries, but it is strong in Brazil, China and South Africa, as well as in major transition economies. Situations are contrasted in developing countries and overall, there is no widespread evidence that Total Factor Productivity (TFP) growth is slowing. Rates of TFP growth at European Union level are variable by member state, as is the contribution of technical efficiency and technological progress. In OECD countries, labour productivity increased faster than land productivity as farm labour declined faster than farm land. At the global level, the growth rate of crop yields has declined in the last 15 years compared to previous periods, but at a different pace across commodity. Evidence on competitiveness in the agricultural and agri-food sector based on trade or cost-related measures is relatively scarce.
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