Agricultural Productivity Growth and Incidence of Poverty: An Experience from Africa

Abstract

This study investigates the effects of agricultural productivity growth on poverty.  Using Food and Agriculture Organisation (FAO) data covering two decades (1971-2009) we determined the relationship between agricultural productivity and poverty. Malmquist Index Total Factor Productivity (TFP) was used as indicator of agricultural productivity while Human Development Index (HDI) was adopted as proxy for poverty. Further analysis was carried out to determine whether the performance of factor productivity is due to change in technology or technical efficiency.

The result of Malmquist TFP index analysis showed that the average TFP growth over the period was found to be 0.2 percent per annum with large variation in growth rate across the sampled countries.  Twenty-two countries representing about 52% of the total sample experienced productivity growth and this is largely due to technological change.  Congo and Somalia experienced decline in growth and this may be attributed to the incidence of war and civil unrest which have adverse effect on growth.  Overall, the continent experienced improvement in technology with 2.1 percent upward shift in the production frontier and 1.8 percent decline in efficiency.  Regional comparison of agricultural productivity growth reveals that East, South and North Africa experienced growth of 3.3, 2.6 and 3.6 percent respectively.  There were declines in agricultural productivity in West and Southern Africa regions as a result of reduction in efficiency.

The analysis of agricultural productivity growth on poverty shows a positive and significant relationship between indicators of the two variables.  Specifically, the result indicates that a unit increase in productivity growth will lead to 0.69 percent change in human development index and conversely poverty.  Further analysis revealed that the unit improvement in technological change will cause about 1.3 percent improvement in human development index.

The study concludes that agricultural productivity growth is pro-poor and effective strategy to reduce poverty in Africa.  It is recommended that relevant policies to address the constraints to technology progress and efficiency should be promoted to improve productivity growth and reduce poverty.

Key Words: Malmquist index, Total Factor Productivity, Technology, Efficiency, Agricultural Productivity, Poverty, Africa.