Evaluating the Economic Efficiency of Agricultural Activities in Developing Countries: Domestic Resource Costs and the Social Cost-Benefit Ration

William Masters and Alex Winter-Nelson

No 198201, 1997 Occasional Paper Series No. 7 from International Association of Agricultural Economists

Abstract: This paper demonstrates that the conventional Domestic Resource Cost (DRC) indicator is biased against factor-intensive, low-input techniques, and that a simple Social Cost-Benefit (SCB) ratio is generally a more appropriate measure of economic efficiency. The potential policy significance of improved measurement is shown with data from Zimbabwe and Kenya. In Zimbabwe, the DRC is shown to incorrectly rank high-input large-scale farming systems above more Jabour-intensive smallholder systems; in Kenya, the DRC incorrectly ranks high-input horticultural crops above more Jabour-intensive food grains and traditional export crops.

Keywords: Agribusiness; Agricultural Finance; International Development; Public Economics (search for similar items in EconPapers)
Pages: 11
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaaeo7:198201

DOI: 10.22004/ag.econ.198201

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