ENVIRONMENT-SPECIFIC RATES AND BIASES OF TECHNICAL CHANGE IN AGRICULTURE

In developing countries, growth rates of agricultural technology exhibit wide variation across environments because of heterogeneity of land quality. Technical change analyses employing aggregate data typically capture this information very imperfectly, because observation units rarely coincide with areas of environmental uniformity. The author presents a model permitting environment-specific variation in the rate and factor bias of technical change when information on environmental qualities is limited. An application using Philippine data reveals substantial discrepancies between stylized irrigated and nonirrigated areas in the rate and biases of technical change. Implications of these differences for employment growth and income distribution are analyzed.