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Abstract

The relative efficiency levels of 283 rural households from three regions in eastern Paraguay are measured using a nonparametric approach. Technical, allocative, and scale efficiency measures are calculated both at national and regional levels, and factors that may affect the efficiency levels are analyzed econometrically. The three regions selected for this study represent distinct production systems and socio-economic conditions: production of traditional crops or extensive livestock operations; a dynamic region with massive in-migration where capitalized farms produce soybeans and wheat; and an older region, integrated with urban areas, where depleted and highly fragmented land has forced households to rely on nonagricultural sources of income. Nonparametric results show high levels of technical efficiency across all three regions, but low levels of allocative and scale efficiency. Because policies to increase scale efficiency are politically unpalatable, the factors affecting allocative efficiency are explored. Significant factors include employment opportunities, land titling, and access to credit, markets, and extension services.

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