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The joint effects of information and financing constraints on technology adoption: Evidence from a field experiment in rural Tanzania

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  • Harou, Aurélie P.
  • Madajewicz, Malgosia
  • Michelson, Hope
  • Palm, Cheryl A.
  • Amuri, Nyambilila
  • Magomba, Christopher
  • Semoka, Johnson M.
  • Tschirhart, Kevin
  • Weil, Ray

Abstract

Low investment in profitable technologies contributes to persistent poverty. Many farmers in developing countries invest too little in fertilizer despite evidence that fertilizer is profitable. This field experiment investigates a two-part explanation: (1) farmers are reluctant to invest without farm-specific evidence of profitability, possibly because of heterogeneous returns, and (2) information is not sufficient to increase investment because of financing constraints. Farmers in one arm of the experiment receive fertilizer recommendations based on tests of their soils, others receive recommendations paired with an input subsidy, and others receive only the input subsidy. Only farmers who receive recommendations and the subsidy increase fertilizer application and yields relative to the control group. The financing constraint may explain limited response to heterogeneous fertilizer recommendations. The approximate net benefit of increased yields, accounting for the full cost of inputs and soil tests, is equivalent to average wages for seven days of work.

Suggested Citation

  • Harou, Aurélie P. & Madajewicz, Malgosia & Michelson, Hope & Palm, Cheryl A. & Amuri, Nyambilila & Magomba, Christopher & Semoka, Johnson M. & Tschirhart, Kevin & Weil, Ray, 2022. "The joint effects of information and financing constraints on technology adoption: Evidence from a field experiment in rural Tanzania," Journal of Development Economics, Elsevier, vol. 155(C).
    • Handle: RePEc:eee:deveco:v:155:y:2022:i:c:s030438782100081x
    DOI: 10.1016/j.jdeveco.2021.102707
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    3. Andrew Dillon & Nicoló Tomaselli, 2024. "Making Markets: Experiments in Agricultural Input Market Formation," Working Papers - Economics wp2024_18.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    4. Xavier Giné & Shreena Patel & Bernardo Ribeiro & Ildrim Valley, 2022. "Efficiency and equity of input subsidies: Experimental evidence from Tanzania†," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(5), pages 1625-1655, October.
    5. Meysam Kazemi & Faramarz F. Samavati, 2023. "Automatic Soil Sampling Site Selection in Management Zones Using a Multi-Objective Optimization Algorithm," Agriculture, MDPI, vol. 13(10), pages 1-25, October.
    6. KOJIN, Emi & DO, Van Hoang & NGUYEN, Thiet & ARIMOTO, Yutaka & VO, Hong Tu & MANO, Yukichi & NGUYEN, Duy Can & TSUKADA, Kazunari, 2023. "Government and market initiatives for the governance of fertilizer quality in Vietnam," Discussion paper series HIAS-E-130, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    7. Michelson,Hope Carolyn & Gourlay,Sydney & Wollburg,Philip Randolph, 2022. "Non-Labor Input Quality and Small Farms in Sub-Saharan Africa : A Review," Policy Research Working Paper Series 10092, The World Bank.
    8. Mao, Hui & Chai, Yujia & Shao, Xiaoxuan & Chang, Xue, 2024. "Digital extension and farmers' adoption of climate adaptation technology: An empirical analysis of China," Land Use Policy, Elsevier, vol. 143(C).
    9. Berazneva, Julia & Maertens, Annemie & Mhango, Wezi & Michelson, Hope, 2023. "Paying for agricultural information in Malawi: The role of soil heterogeneity," Journal of Development Economics, Elsevier, vol. 165(C).
    10. Harou, Aurelie P. & Tamim, Abdulrazzak, 2024. "Technology adoption and farmer beliefs: Experimental evidence from Tanzania," 2024 Annual Meeting, July 28-30, New Orleans, LA 344029, Agricultural and Applied Economics Association.
    11. Lasdun, Violet & Harou, Aurelie P. & Magomba, Christopher & Guerena, David, 2022. "Peer Learning in a Digital Farmer-to-Farmer Network: Effects on Technology Adoption and Self-Efficacy Beliefs," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322561, Agricultural and Applied Economics Association.
    12. Leshan Yu & Yan Song & Haixia Wu & Hengtong Shi, 2023. "Credit Constraint, Interlinked Insurance and Credit Contract and Farmers’ Adoption of Innovative Seeds-Field Experiment of the Loess Plateau," Land, MDPI, vol. 12(2), pages 1-28, January.
    13. Beg, Sabrin & Islam, Mahnaz & Rahman, Khandker Wahedur, 2024. "Information and behavior: Evidence from fertilizer quantity recommendations in Bangladesh," Journal of Development Economics, Elsevier, vol. 166(C).

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