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Abstract
Nepalese agricultural productivity growth has been very low for a long time. An
important reason is the low level of technological innovation and lack of
substantial investment in the development of human capital (Schultz, 1964).
Education makes a substantial contribution to agricultural productivity in areas
of changing technology (Nelson and Phelps; and Schultz, 1975) and contributes to
productivity through the worker and allocative effectsl (Welch).
This paper studies the main agricultural and educational characteristics of
modernizing and traditional regions of Nepal to determine the factors responsible
for differences in the levels of technological innovation, education, and
extension between the regions; examines whether there is a relationship between
education and factors such as farm income or modern input use; investigates
whether education contributes to farm productivity through the worker,
allocative, or both effects in the two types of areas; tests whether education
makes a substantially higher contribution to output in the technolgically dynamic
environment than in the traditional area; determines whether education and
extension are substitutes in the farm decisionmaking process; and tests whether
the educated farmers attain higher economic efficiency than the illiterates.