ICAR- IFPRI Experimental methods to measure willingness to pay avinash kishore
ICAR-IFPRI: TFP estimation and returns to research : P Kumar
-
Upload
international-food-policy-research-institute-south-asia-office -
Category
Education
-
view
622 -
download
0
Transcript of ICAR-IFPRI: TFP estimation and returns to research : P Kumar
Total Factor Productivity:
Concept and Returns to
Research
Praduman kumar
Professor, IARI
• Total Factor Productivity
• Q=f(X1, X2, …..Xn)
• Q=f(x1t1, x2t2, ….xntn)
• Q=f(x,T)
• TG = QG-XG
• TFP Index = Output Index/Input index
Approaches for TFP measurement
• The parametric approach
• The accounting approach
• Non-parametric approach
The parametric approach
• Production function O =f(x,t)
• Cost function C=f(y,t)
• Partial differentiation with respect to time
gives technological change estimates
Production Function
• Estimate the production function for improved technology
• Estimate the production function for local technology
• Decompose the difference in yield between improved and local technology and its sources.
• Sources of change are:– Due to technology
– Due to change in inputs» Labour
» Feed
– Estimate benefits (value of input saved under improved over local technology)
Decomposition model
Y0
Y1
C
a
b
c
Fish input
Fish yield
X1X0
Y0 C = Yield gain due to improved
tech
C Y1 = Yield gain due to additional
inputs
Improved tech
Local
Tech
0 0 0 0 0ln ln lnY DCP V
1 1 1 1 1ln ln lnY DCP V
1 1 11 0 0 1
0 0 0
ln ln ln lnY DCP
DCPY DCP
% in yield = % in yield due to improved strain +
% in yield due to additional inputs
Decomposition Model
Local strain
Improved strain
The Accounting Approach
• Divisia-Tornqvist Index is used
• Construct input index
• Construct output index
• TFP index = output index/input index
Ref Christensen, 1975
•Research,
• Extension,
• Education,
• Infrastructure,
• Health of natural
resources,.....
Area Growth
TFP Growth
Input Growth
• Land
• Labour
• Fertilizer
• Irrigation
• Machine
• Seed
.
.
.
.
Yield Growth
Yield-Area
Decomposition
Input-TFP
Decomposition
•Input Prices,
• Output Price,
• Technology,
• Institutions,
• Infrastructure.....
Data requirement for TFP
computation
• Quantity of output (commodity) produced
• Price of commodities
• Quantity of various inputs used
• Price of inputs
)Q/Q( = TOI/TOI2/)R+R(
1jt-jtj1t-t
11jt-jt
Total Output Index (TOI)
Total Input Index (TOI)
/2)S+S(1
1-itit
)x/x( = TII / TII 1it-iti1t-t
Total Output Index
TOI (t) = TOI (1).TOI(2)………………TOI(t-1)
Total Input Index
TII (t) = TII (1).TII(2)………………TII(t-1).
Total Factor Productivity Index
TFPt = (TOIt / TIIt )
TFP EXAMPLE 1.xlsx
Trends in Rice TFP, All India
70
80
90
100
110
120
130
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
Year
TF
P in
de
x
Growth in total factor productivity of rice in India 1975 to 2005
Growth of Growth of Total factorRegion inputs output productivity
growth
Eastern 1.20 1.98 0.78
Western 2.37 2.54 -0.75
Northern 2.39 3.82 1.37
Southern 1.62 2.68 1.12
India 2.05 2.72 0.67
Annual growth in TFP and real
cost of production:1975-05Crop TFP RCP
Rice 0.67 -1.01
Wheat 1.92 -2.28
Maize 1.39 -1.30
Jowar 0.63 -2.06
Bajra 1.04 -1.86
Barley 1.38 -2.07
Gram 0.16 -1.01
Arhar -0.69 -1.11
Moong 0.53 -0.90
Annual growth in TFP and real
cost of production:1975-05Crop TFP RCP
Soybean 0.71 -0.84
Groundnut 0.77 -1.11
Rapeseed & Mustard 0.79 -1.99
Sugarcane 0.41 -0.36
Cotton 1.41 -1.62
Jute 1.28 -1.73
Sources of TFP
• TFP =f( Research, Extension, Markets, Balance use of fertilizers, Sources of water, Rural Literacy, Climatic factors)
• EVMP® = Elasticity of research stock*(Value of output associated with TFP/Research stock)
• Generate benefit stream . Research benefit lag.
• Benefits will be 0.1EVMP, 0.2 EVMP,….
0.9EVMP, 0.8EVMP,……, 0.1EVMP
• Compute returns to research Investment
Annual growth in TFP and real
cost of production:1975-05Crop EVMP IRR
Rice 2.02 29
Wheat 4.03 38
Maize 1.85 28
Jowar 4.28 39
Bajra 2.29 31
Gram 2.84 34
Groundnut 0.71 18
R&M 0.89 20
Cotton 4.15 39
Contribution of research to
crop sector in India:2005-06Particulars Value
Contribution of research to selected 9 crops (in
crore Rs)
1552
Share of the selected crops under study in value of
output (%)
41.4
Research contribution to total crop sectors based
on selected crops (in crore Rs)
3748
Research investment in the year 2005-05 (in crore
Rs)
2814
Returns to research investment (%) 33.2
IRR to Research investment 1985-86 to 2006-07 46.0%
1990-91 to 2006-07 42.0%
NCAP TFP POLICY PAPER 25
TFP _KL_IGP paper.pdf
ejdr201536a.pdf