Total Factor Productivity in Tunisian Agriculture: Measurement and Determinants

The paper analyses the patterns of agricultural productivity) in Tunisian agriculture during the period 1981-2007. To undertake this analysis we examined own and cross price elasticities of different production factors using a translog production function which provides a convenient framework for analysing output reaction to changes in prices. Moreover a regression approach was used to test the hypotheses that government-funded research, development and extension (RD&E), private and investment, terms of trade, and share of irrigated area are significant determinants of total factor productivity (TFP) in the agricultural sector. We found significant negative cross-price elasticities between labor and capital suggesting that agricultural policies in the form of subsidies for agricultural machinery could be introduced without negatively affecting the agricultural labor force. Our results indicate that agricultural productivity experienced moderate annual growth between 1981 and 2007. Over the whole period, land and capital were found to be the most important contributors to productivity, followed by agricultural inputs and livestock, while labor was the least significant single contributor. The findings show that TFP growth was the result of investments in the agricultural sector with the use of intensive irrigated production systems and the adoption of new production technologies.