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Agricultural Productivity in Bangladesh: an Enquiry Into the Sources of Variation

Rezina Ferdous
Department of Statistics, University of Dhaka, Dhaka-1000, Bangladesh.

Abstract/ Executive Summary:

The study attempts to analyse the sources of variation and regional disparity in agricultural production by using the agricultural data of Bangladesh. In order to investigate the agricultural productivity, Cobb-Douglas production function has been considered. Attempt has also been made to analyse the agricultural productivity within a general framework to examine the variation in production due to the peculiarities of the regional unit and year, after accounting for the variation in known inputs. The study also attempts to investigate the types of inputs that are influencing the agricultural production and their implications on the agricultural economy is highlighted.

Keywords: Agriculture, Productivity, Sources of Variation

Location: Bangladesh

Start Date: 00-00-1974

End Date: 00-00-1981

Program Area: Socio-economic and Policy

Non-commodity: Analysis and interpretations

Objectives:

To analyse the sources of variation and regional disparity in agricultural production by using the agricultural data of Bangladesh.

Methodology:

The present study considers the cross-section agricultural data for the year 1974 and 1981 over the eighteen regions of Bangladesh (BBS: 1984, 1985, 1987). The variables considered are total agricultural output (dependent variable), land area, irrigated area, fertilizer and agricultural labour force. The types of crops considered are the three varieties of rice- namely, Aus, Aman and Boro; Wheat and Sugarcane, as these contribute to sixty percent or more to the total production. Although the region-wise data were available for all the variables between ten to twenty years, the same was not available for labour force. So it was not possible to consider the pooled data over all the regions and over the years. Hence only the cross-section data over the eighteen regions of Bangladesh has been considered for the years 1974 and 1981 for each crop under consideration. This is one of the limitations of this study. The simplest method of estimating the parameters of Cobb-Douglas production function is to apply the Ordinary Least Square (hereafter OLS). But the estimates obtained by OLS will be biased by the differences in the sizes of the regions. At the same time, the assumption of heteoscedasticity cannot be considered to hold. So father than adopting the OLS method of assigning equal weights of unity to each residual, it is reasonable to assign the ratios of the variance of u_i, i.e., σ_ui² as weights. So each residual will have to be divided by σ_ui², providing smaller weights for larger disturbances. Hence instead of minimising the simple sum of squared residual we mini mise the weighted sum of squared residuals. This Weighted Least Square (hereafter WLS) can be viewed as a special case of the Generalise Least Square (GLS). The Cobb-Douglas production function has been estimated both by OLS and WLS (total land area taken as weights) by considering: (a) OLS on the total amount of output as a function of the total amount of inputs, (b) WLS on the total amount of output as a function of the total amount of mputs and (c) OLS by using dummies along with the interaction of dummies with other variables. It has been assumed that all the eighteen regions lie on the same production function. But the econometric techniques used allow the region to vary in the intercepts or levels of technology and inputs used. To test the homogeneity assumption, eighteen regions have been divided into two groups. The data considered in this study is not large enough, the small sample properties of this asymptotic test are too weak. The diagnostic tests performed are the usual tests for heteroscedasticity and multicollinearity and here also the small sample properties of the tests are too weak. The presence of heteroscedasticity has been examined by the Breusch and Pagan (B-P-G) test and Goldfeld and Quandt (G-Q) test. The Breusch and Pagan test is an asymptotic test and as the data considered in this study is not too large, the Goldfeld and Quandt test which is applicable for small samples has also been considered.

Source of Information: Bangladesh J. Sci. & Tech. 1(1): 97-106, 1999 (January) ISSN 1560-1064

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

The present study suggested that the agricultural production of major crops in Bangladesh is land intensive and fertilizer is one of the most significant inputs in increasing production. Land being a fixed input the possibility to increase output through increased use of land is substantially low. But there is an ample opportunity for output expansion through yield increasing method. The study also suggested that irrigation facility is not designed at the moment to contribute to output expansion. Hence there is a need to design irrigation facilities. The use of aggregate number of labourers rather than the actual man-hour might be the reason of unexpected negative sign of labour coefficient. The regions in this study have been considered in groups and as such the peculiarities of individual regions can hardly be observed. However, it can be partially observed that the positive contributions by regions in division three to total output may be mainly due to land area or total cropped area. In order to eliminate the gap in production at regional level the productivity character of each region is to be studied carefully. Due to the lack of research, information and opportunities, some regions may he engaged in producing crops for which they are not best suited.

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