Factor Contribution and Productivity Growth in Underdeveloped Agriculture: A Study from Liberalised India

Atanu Sengupta and Subrata Kundu
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Atanu Sengupta: Department of Economics, Burdwan University, Burdwan, West Bengal, India
Subrata Kundu: Department of Economics with Rural Development, Vidyasagar University, Midnapur, West Bengal, India

Indian Economic Review, 2008, vol. 43, issue 2, pages 265-285

Abstract: Productivity growth is essential for economic enhancement of any country. However it is empirically quite perplexing to estimate it. The standard practice is to estimate productivity changes by incorporating a time trend within the production function (Baltagi and Griffin 1988; Kumbhakar and Hesmati 1996; Stevenson 1980 among others). This provided a measure of overall technical change often coined as Total Factor Productivity (TFP). However the problem with TFP is its inability to decompose into various factors specific effects. The alternative is to visualize technical change within a Factor Augmenting (FA) approach (Beckmann and Sato, 1969; Sato and Beckmann, 1969; Kumbhakar, 2002, 2004). This approach enables us to disentangle different factor contributions to overall technical change. Applying the methodology to the Indian state of West Bengal reveals a lopsided technical change with sufficient amount of surplus labour and inefficient capital use. Serious policy action is necessary to remedy this situation.

Keywords: Agricultural Growth; Efficiency; Underdeveloped Economy; Growth Diversity. (search for similar items in EconPapers)
JEL-codes: O13 O40 O16 I31 (search for similar items in EconPapers)
Date: 2008

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