Measures of fixed capital in agriculture.

This chapter discusses a new approach for measuring agricultural capital stocks in a consistent fashion for the purpose of international comparisons. For 30 countries, the authors now have consistent estimates of agricultural fixed capital, livestock capital and tree stock capital for 1967-2000 (and 57 countries for 1967-1992). In their approach, fixed capital is measured from past annual investments in machines and structures, appropriately discounted for depreciation. Their approach for measuring capital of agricultural origin (livestock and tree capital) can be extended to include any country in the FAOSTAT dataset. With these new measures of capital they then reassess the contribution of capital accumulation to agricultural growth. Their results confirm a strong role for capital in raising labour productivity and output in agriculture. Another important implication of their results is that a simple count of machinery in use is likely to understate capital accumulation in agriculture. This bias is likely to be larger in higher income countries where fixed capital plays a relatively larger role than capital of agricultural origin. The implication for productivity is that any underestimation in the growth of agricultural capital is likely to imply an overestimation in the measured rate of TFP growth.