Six Decades of Total Factor Productivity Change and Sources of Growth in Bangladesh Agriculture (1948–2008)

Authors

  • Sanzidur Rahman,

  • Ruhul Salim

    Search for more papers by this author
    • Sanzidur Rahman is a Associate Professor in Rural Development at the School of Geography, Earth and Environmental Sciences, University of Plymouth, Plymouth, PL4 8AA, UK. E-mail: srahman@plymouth.ac.uk for correspondence. Ruhul Salim is a Associate Professor of Economics at the School of Economics and Finance, Curtin Business School, Curtin University, Perth, Australia. Creation of the required database for this project was generously supported by the British Academy Small Research Grant 2009. The authors also gratefully acknowledge the contribution of Dr. M.A. Hamid who compiled most of the required data under the research grant scheme. The article was presented at an invited seminar at the School of Economics and Finance, Curtin Business School, Perth Australia on August 9, 2012. The authors gratefully acknowledge comments and suggestions from three referees and the chief editor that have substantially improved the article. All caveats remain with the authors.


Abstract

This study applies the Färe–Primont index to calculate total factor productivity (TFP) indices for agriculture in 17 regions of Bangladesh covering a 61-year period (1948–2008). It decomposes the TFP index into six finer components (technical change, technical-, scale- and mix-efficiency changes, residual scale- and residual mix-efficiency changes). Results reveal that TFP grew at an average rate of 0.57% p.a. led by the Chittagong, Rajshahi, Rangpur, Dinajpur and Noakhali regions. TFP growth is largely powered by technological progress estimated at 0.74% p.a. Technical efficiency improvement is negligible (0.01% p.a.) due to stagnant efficiency in most of the regions. Decline in scale efficiency is also negligible (0.01% p.a.), but the decline in mix efficiency is high at 0.19% p.a. Decomposition of the components of TFP changes into finer measures of efficiency corrects the existing literature’s blame of a decline in technical efficiency as the main cause of poor TFP growth in Bangladesh. Among the sources, farm size, R&D investment, extension expenditure and crop specialisation positively influenced TFP growth, whereas the literacy rate had a negative influence on growth. Policy implications include encouraging investment in R&D and extension, land reform measures to increase average farm size, promotion of Green Revolution technology and crop diversification.

Ancillary