Biases of Technical Change in South African Agriculture: A Cost Function Approach

R F Townsend, Y Khatri and C Thirtle

Studies in Economics and Econometrics, 1998, vol. 22, issue 2, 15-27

Abstract: This paper exploits the properties of the third order approximation of the translog cost function which allows nested tests regarding the nature of technical change and specifically a direct test for price-induced technical change. Using data from 1949 to 1990 the input demand elasticities and factor saving biases were estimated for South African agriculture. Large machinery-using biases of technical change were evident with no labour-using biases. This, together with substitutability between machinery and labour, has-not contributed to alleviating the unemployment problem currently faced in South Africa. The hypothesis of no price induced bias was rejected suggesting that changing pricing policies may be a consideration for alleviating the current technology biases in South African agriculture.

Date: 1998
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DOI: 10.1080/03796205.1998.12129122

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