Understanding transient technology use among smallholder farmers in Africa: A dynamic programming approach

Maolong Chen, Chaoran Hu and Robert J. Myers

Agricultural Economics, 2022, vol. 53, issue S1, 91-107

Abstract: This article studies the causes and effects of transient use of agricultural technology. Most existing studies have assumed that adoption of modern technology is irreversible, and widely ignored the switching between technologies that is often observed in practice. To more fully understand the pattern of agricultural technology adoption, this article takes switching behavior into account and develops a dynamic switching model to analyze transient technology use. The conceptual model is then calibrated and simulated using dynamic programming, and numerical results show that relative profitability, switching costs, and farmer's foresight are important influences on the pattern of transient technology use. Switching costs play a key role in preventing farmers from adopting new technologies, even when they appear otherwise profitable, and can cause farmers to switch back to traditional technologies, even when the move appears otherwise irrational. Also, smallholder farmers, differentiated based on their perception of switching costs and future economic conditions, exhibit heterogeneous decision rules and adoption patterns. Therefore, policies targeted at increasing technology adoption will be more effective if they differentiate specific types of farmers.

Date: 2022
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