Agricultural policy and productivity: evidence from Brazilian censuses

Brazil's economic strategy has shifted hesitatingly during the last several decades from one of producer protection to trade competitiveness. Exploiting the variations these shifts have afforded, we use a sequence of decennial agricultural censuses to examine Brazilian policy implications for agricultural competitiveness and efficiency. Total factor productivity is decomposed into best-technology and efficiency elements, each subject to policy influence. We find technology growth, at 4.5% per annum, to have been extraordinarily high, particularly in the south. But because productivity among average producers has fallen rapidly behind that on the technical frontier, total productivity growth has been a much more modest 2.6% per year. Public agricultural research programs most benefit the country's technological leaders, widening the gap between frontier and average producer. Credit, education, and road construction policies instead narrow that gap. Credit and road programs especially enhance efficiency in the south, where efficiency losses have been greatest.