Rahman, S
Faculty of Science and Engineering School of Geography, Earth and Environmental Sciences, University of Plymouth
Diversification economies, Diversification efficiencies, Stochastic input distance function, Crop diversification, Bangladesh.
Three agro-ecological regions of Bangladesh
Knowledge Management
Crop diversification
2.1 Data and the study area: The study is based on farm-level cross section data for the crop year 1996 collected from three agro-ecological regions of Bangladesh. The survey was conducted from February to April 1997. Samples were collected from eight villages of the Jamalpur Sadar sub-district of Jamalpur, representing wet agro-ecology, six villages of the Manirampur sub-district of Jessore, representing dry agro-ecology, and seven villages of the Matlab sub-district of Chandpur, representing wet agro-ecology in an agriculturally advanced area. A multistage random sampling technique was employed to locate the districts, the Thana (sub-districts), and then the villages in each of the three sub-districts, and finally the sample households. A total of 406 households1 from these 21 villages were selected. Detailed crop input-output data at the plot level for individual farm households were collected for ten crop groups2. The dataset also includes information on the level of infrastructural development3 and soil fertility determined from soil samples collected from representative locations in the study villages4.
2.2 Analytical framework Sources of productivity growth can be decomposed into two principal components: technical efficiency (TE) and technical change (TC). TE can be interpreted as a relative measure of managerial ability for a given level of technology, whereas TC evaluates the effect on productivity arising from the adoption of new or improved production processes. The gains in TE are derived from improvements in decision making, which in turn are assumed to be linked to a host of socio-economic conditions, e.g., knowledge, education, and experience. On the other hand, TC relates to investment in research and technology. In this study, we are interested in examining whether crop diversification leads to gains in TE (i.e., diversification efficiencies), as well as whether diversification into various crop enterprises lead to gains in economies of scale (i.e., diversification economies).
To examine the existence of diversification economies and diversification efficiencies, a multi-output, multi-input production technology specification is required as opposed to the commonly used single-output, multi-input production technology. The use of a distance function approach (either output-orientated or input-orientated) circumvents this problem and can be analyzed using either parametric or non-parametric methods. Also, the main advantage of a distance function approach is that the production frontier can be estimated without assuming separability of inputs and outputs. An output oriented approach to measure technical efficiency is appropriate when output is endogenous (e.g., revenue maximization case) but inputs are exogenous, whereas an input oriented approach is appropriate when inputs are endogenous (e.g., cost minimization case) but output is exogenous. We have selected the use of an input orientated stochastic distance function to address these research questions. This is because, in an economy like Bangladesh, on the one hand, inputs are highly scarce, particularly the land input, and on the other hand, farmers are often constrained by cash/credit. Therefore, it is logical to assume that cost minimization is the prime concern.
JEL classification: O33; Q18; C21 University of Plymouth PEARL https://pearl.plymouth.ac.uk 2009-08-01
Report/Proceedings