Capital accumulation and the growth of aggregate agricultural production
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This report empirically examines the role which capital accumulation plays in the growth
of agricultural production potential. The report assumes that the degree to which available
technology can be implemented in a nation's agricultural sector depends on accumulated
investments that have been made in the sector. Results from estimating aggregate agricultural
production functions show the primary importance of rural labor in accounting for
agricultural GDP and crop production. Capital accumulation is the dominant explainer of
livestock production. Estimation results support the conjecture that capital tends to save
scarce land resources (substitute relationship) and use rural labor (complementarity relationship).
Output supply elasticities derived from the estimated equations tend to be large.
The large elasticities imply that price distortions have had large impacts on resource use
and production.