Prices and Productivity in Agriculture

Developing countries have been found to tax agriculture heavily, which might affect the productivity of resources allocated to agriculture, as well as their quantity. A variable-coefficient cross-country agricultural production function is estimated, with past price expectations among the determinants of the production coefficients. Productivity is found to be responsive to those expectations, with the implication that had these developing economies eliminated their price interventions, agricultural productivity would have increased on average by about a third.