Technology Capital: The Price of Admission to the Growth Club

We assess long-run patterns of global agricultural productivity growth in developing countries between 1970 and 2005 and examine the relationship between investments in technology capital and productivity. To measure agricultural total factor productivity (TFP) we employ a Solow-type growth accounting method to decompose output growth into input and TFP growth. For technology capital we construct two indexes reflecting national capacities in agricultural research and education-extension for 87 developing countries. We then correlate technology capital levels with long-term growth rates in agricultural TFP. Our findings show that average agricultural TFP growth in developing countries accelerated in the 1980s and 1990s but fell marginally in the early 2000s. TFP performance was very uneven across countries and regions. TFP growth rates by individual countries were significantly influenced by their levels of technology capital. Marginal improvements to research capacity, given a minimal level of extension and schooling existed, were associated with faster TFP growth. However, marginal increases in extension-schooling without commiserate improvements in research capacity did not improve productivity performance.