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Governance and Agricultural Production Efficiency: A Cross‐Country Aggregate Frontier Analysis

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  • Mon‐Chi Lio
  • Jin‐Li Hu

Abstract

This study uses a stochastic frontier approach to investigate the relationship between six governance indicators and agricultural efficiency. We find that improvements in rule of law, control of corruption and government effectiveness enhance agricultural productivity significantly if each indicator enters the inefficiency equation independently. When all six indicators are included in the equation, we find that an improvement in rule of law raises agricultural efficiency significantly, but increases in voice and accountability and political stability appear to significantly reduce agricultural efficiency. Grouping the six indicators into three dimensions, we find that an improvement in ‘respect for institutional framework’ raises agricultural efficiency significantly, but an enhancement in ‘selection of authority’ reduces agricultural efficiency significantly. Our results imply that poorer countries can enhance their agricultural efficiency substantially by strengthening the state and citizens’ respect for institutional framework. However, our results show that greater democracy is associated with lower agricultural efficiency. This finding is consistent with interest group capture and political failure arguments of the political economy literature.

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  • Mon‐Chi Lio & Jin‐Li Hu, 2009. "Governance and Agricultural Production Efficiency: A Cross‐Country Aggregate Frontier Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 40-61, February.
    • Handle: RePEc:bla:jageco:v:60:y:2009:i:1:p:40-61
    DOI: 10.1111/j.1477-9552.2008.00172.x
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    5. Rouf, Abdur, 2015. "Conventional vs Natural Flood Control and Drainage Managements in a Tidal Coastal Zone: An Evaluation from a Productive Efficiency Perspective," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 256023, Agricultural Economics Society.
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    7. Konstantakis, Konstantinos N. & Michaelides, Panayotis G., 2017. "Technology and Business Cycles: A Schumpeterian Investigation for the USA," MPRA Paper 80636, University Library of Munich, Germany.
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    9. Lin, J., 2018. "The role of institutions in international coconut trade: a gravity model approach," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277012, International Association of Agricultural Economists.
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