The green revolution and the productivity paradox : evidence from the Indian Punjab

The author provides district-level estimates of the contribution of technical change to agricultural output growth in the Indian Punjab from 1960 to 1993. Contrary to widespread belief, productivity growth in the Punjab was surprisingly low during the green revolution (in the mid-1960s), when modern hybrid seed varieties were being adopted. It improved later, after adoption of the new varieties was essentially complete. The author proposes three reasons for this pattern: (1) The standard measure of total factor productivity overstates the contribution of capital to output growth at the expense of the productivity residual. High-yielding varieties introduced in the 1960s helped spur output growth by making crops responsive to water and fertilizer, which not only allowed but indeed encouraged far greater use of capital inputs. This increase in the elasticity of the output response to capital inputs is incorporated into the index of factor accumulation and therefore excluded from the measure of total factor productivity growth. As a result, the contribution of technical change to growth in Punjab's agriculture during the green revolution is probably underestimated. (2) The overstatement of the capital contribution during the green revolution is exacerbated by indivisibilities in capital inputs. (3) Productivity growth did not come from the adoption of modern varieties alone. Improved resource management and public investment in infrastructure also helped improve productivity.