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Trade openness and technical efficiency in Brazilian agriculture

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  • Dragan Miljkovic
  • Silvia H. Miranda
  • Saleem Shaik

Abstract

This study is conducted (1) to examine the possible link between increased trade openness and technical efficiency in Brazilian agriculture and (2) to contribute to the scholarly debate in the literature by measuring the impact of trade openness on technical efficiency. The analysis is conducted by using the Stochastic Frontier Analysis (SFA) method. Our results indicate large and significant impact of capital, and lesser but significant impact of labour on sectorial output, while expanding farmland would not increase the output. The estimates of trade openness are not statistically significant, indicating that it does not impact technical efficiency. Trade liberalization as an underlying motive for increasing technical efficiency does not exist based on our results. The primary markets for Brazilian agricultural commodities are still the domestic markets, which are still relatively well protected from foreign competition. This implies that domestic producers are not forced to use existing inputs more efficiently given the relative lack of competition domestically and enlarged foreign markets expanding primarily in the booming and large Asian economies.

Suggested Citation

  • Dragan Miljkovic & Silvia H. Miranda & Saleem Shaik, 2013. "Trade openness and technical efficiency in Brazilian agriculture," Applied Economics Letters, Taylor & Francis Journals, vol. 20(2), pages 103-106, February.
    • Handle: RePEc:taf:apeclt:v:20:y:2013:i:2:p:103-106
    DOI: 10.1080/13504851.2012.684870
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    References listed on IDEAS

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    1. Francisco Alcalá & Antonio Ciccone, 2004. "Trade and Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 613-646.
    2. Miljkovic, Dragan & Paul, Rodney, 2003. "Agricultural trade in North America: Trade creation, regionalism and regionalisation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 1-18, September.
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    4. Krishna G. Iyer & Alicia N. Rambaldi & Kam Ki Tang, 2008. "Efficiency externalities of trade and alternative forms of foreign investment in OECD countries," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 749-766.
    5. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Hussein Al-Zyoud & Asheref Illiyan & Vasim Akram, 2022. "Impact of Economic Openness on Macro Technical Efficiency in South Asia," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 28(3), pages 91-103, November.
    2. Ligia Alba Melo-Becerra & Antonio José Orozco-Gallo, 2015. "Eficiencia técnica de los hogares con producción agropecuaria en Colombia," Documentos de trabajo sobre Economía Regional y Urbana 227, Banco de la Republica de Colombia.
    3. Hart, Jarret, 2013. "Impact of Trade Openness on Technical Efficiency: Agricultural Sector of the European Union," 2013: Employment, Immigration and Trade, December 15-17, 2013, Clearwater Beach, Florida 182500, International Agricultural Trade Research Consortium.
    4. Kashiwagi, Kenichi, 2017. "Technical Efficiency of Olive-growing Farms in the Northern West Bank of Palestine," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 6(2), May.
    5. Danelon, André Felipe & Spolador, Humberto Francisco Silva & Bergtold, Jason Scott, 2023. "The role of productivity and efficiency gains in the sugar-ethanol industry to reduce land expansion for sugarcane fields in Brazil," Energy Policy, Elsevier, vol. 172(C).
    6. Ligia Alba Melo-Becerra & Antonio José Orozco-Gallo, 2017. "Technical efficiency for Colombian small crop and livestock farmers: A stochastic metafrontier approach for different production systems," Journal of Productivity Analysis, Springer, vol. 47(1), pages 1-16, February.
    7. Hakimah Nur Ahmad Hamidi & Norlin Khalid & Zulkefly Abdul Karim & Muhamad Rias K. V. Zainuddin, 2022. "Technical Efficiency and Export Potential of the World Palm Oil Market," Agriculture, MDPI, vol. 12(11), pages 1-16, November.
    8. Shchetynin, Yevhenii, 2015. "Effects of imports on technical efficiency in Russian food industry," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 37(1), pages 27-42.
    9. Enerelt Murakami, 2013. "Efficiency and productivity of the Mongolian livestock sector in an open economy," Economics Bulletin, AccessEcon, vol. 33(4), pages 2617-2626.
    10. Fang, Guozhu & Zhang, Xiaoheng & Qi, Chunjie, 2021. "Are Integrated Crop-Livestock Systems More Technical Efficiency? Evidence from Small Farmers in China," 2021 Conference, August 17-31, 2021, Virtual 315129, International Association of Agricultural Economists.

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