Total factor productivity in the chilean crop sector: 1961-1996

Jaime A. Olavarría, Boris Bravo-Ureta, Horacio Cocchi

Abstract

The main objective of this paper is to determine the productivity growth in the Chilean Agricultural sector during the 1961-1996 period. Total Factor Productivity (TFP) was calculated using the Törnqvist index, which is a discrete approximation to the Divisia index. The data used to estimate these indexes are prices and quantities for 51 crops, and for four inputs —labor, land, capital and intermediate factors. The rate of annual growth for the period 1961-96 was 2,69% and –0,09%, for products and inputs, respectively. Therefore, the TFP grew at an average annual rate of 2,78%. Given a significant annual variability in TFP growth, an analysis was carried out for seven sub-periods corresponding to different political regimes. TFP grew at an annual average of 1,83% with Alessandri (1961-64), 3,12% under the period of Frei Montalva (1965-70), 1,52% during the Allende years (1971-73), 6,11% during the first part of the Pinochet regime and –0,28% in the second period of Pinochet (1981-89), 3,12% during Aylwin (1990-93) and 5,28% under Frei Ruiz-Tagle (1994-96). The results suggest that the land reform program implemented in the 1960s did not have a negative effect on TFP growth, as has been previously argued by some authors.

Keywords

Total Factor Productivity; Törnqvist Index; Agriculture; Chile

Subject classification

D24; O33.

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