Publication: Technology catch-up in agriculture among advanced economies
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2020-05-13
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Abstract
The article tests the hypothesis of convergence in relative levels of total factor productivityacross seventeen member countries of the Organization for Economic Cooperation and Development and tries to identify factors that affect the speed of convergence. Using a paneldata model, we investigate the role of relative factor intensities (i.e. embodiment) and assess the impact of fluctuations in aggregate economic activity (i.e., the business cycle). We also consider the role of human capital spillovers and agricultural policy differences such as the Common Agricultural Policy of the European Union. We use a two-step difference Generalised Method of Moments estimator to quantify the contributions of each of these factors. We find evidence of convergence in productivity levels across the different phases of the business cycle.However, the speed of convergence was higher during contractions (negative output gap) than along expansions. Results show that the speed of convergence among the European countries during the economic slowdown is slower than in Australia, Canada and the United States. Finally, we found significant spillovers from investment in human capital and the productivity of the national economy leading to more rapid productivity growth.
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Total Factor Productivity, Business Cycle, Productivity Convergence, OECD Agriculture, Generalised Method of Moments