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Specialization, diversification, and productivity: a panel data analysis of rice farms in Korea

Authors

  • Kwansoo Kim,

    Corresponding author
    1. Department of Agricultural Economics & Rural Development, Seoul National University, 599 Gwanak-ro Gwanak-gu, Seoul, Korea
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  • Jean-Paul Chavas,

    1. Department of Agricultural and Applied Economics, Taylor Hall, University of Wisconsin-Madison, 427 Lorch Street, Madison WI 53706, USA
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  • Bradford Barham,

    1. Department of Agricultural and Applied Economics, Taylor Hall, University of Wisconsin-Madison, 427 Lorch Street, Madison WI 53706, USA
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  • Jeremy Foltz

    1. Department of Agricultural and Applied Economics, Taylor Hall, University of Wisconsin-Madison, 427 Lorch Street, Madison WI 53706, USA
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  • Data Appendix Available Online A data appendix to replicate main results is available in the online version of this article. Please note: Wiley-Blackwell is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing material) should be directed to the corresponding author for the article.

Tel: +82-2-880-4727; fax: +82-2-873-3565. Email address: kimk@snu.ac.kr (Kwansoo Kim).

Abstract

This article examines the microeconomics of productivity associated with specialization/diversification in production activities, with an application to Korean rice farms. Korean rice farms tend to be very small and highly specialized. Our analysis examines the productivity effects associated with both farm size and farm specialization/diversification in Korean agriculture. Relying on farm-level panel data, the analysis studies farm productivity in a multi-input multi-output context, accounting not only for changes in inputs and technical change in rice production, but also for the role of diversification in the production of other crops in current and previous periods. We find positive but small productivity gains from farm diversification. These gains come mostly from complementarity effects across farm outputs, with minimal effect of scale economies. The positive complementarity effects work against nonconvexity effects, which provide strong productivity incentives for rice farms to specialize.

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