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Induced Innovation in the High Rainfall Zone

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  • Martin, John F.

Abstract

The induced innovation hypothesis states that the direction of technical change is determined by changes in relative input prices acting as a "spur to invention". To determine the validity of this hypothesis for the High Rainfall Zone of the Australian sheep industry, technical change biases for five input categories were measured using time series data for the period 1952-53 to 1976-77. These biases were then related to relative changes in the price of these input categories. The biases were measured by the application of a translog cost function model and suggested that, in general, technical change has been biased toward the saving of labour and land, the using of livestock, and neutral in regard to capital, and possibly materials and services. Comparison of the ranking of the measured biases with that of the relative price changes indicated that all results, except those for capital, were in general conformity with the induced innovation hypothesis. Finally, the deficiencies of the model and implications of the results are discussed.

Suggested Citation

  • Martin, John F., 1982. "Induced Innovation in the High Rainfall Zone," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(03), pages 1-20, December.
    • Handle: RePEc:ags:remaae:12522
    DOI: 10.22004/ag.econ.12522
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    References listed on IDEAS

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    1. Kivanda, Lena & Fox, Glenn, 1993. "Falsification and the Practice of Agricultural Production Economists: A Methodological Assessment," Department of Agricultural Economics and Business 258724, University of Guelph.

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