Productivity convergence in Brazil: The case of grain production

Eduardo C. Magalhaes, Xinshen Diao
ifpri discussion paper

"In recent years, Brazil has become a considerable player in agricultural markets for a number of commodities. Such agricultural growth in Brazil has largely been the result of gains in productivity over the last several decades. Still, there remain some sub-national regions and states that lag behind in both agricultural productivity and levels of per capita income. In this paper, we investigate whether technological spillovers in agriculture have reached the poorer or less productive regions with focus on the evolution and patterns of land productivity. To assess such spillovers, we examine three cereal crops: maize, rice and wheat, as these crops are grown by commercial and subsistence farmers throughout the country. We first apply a generalized entropy (GE) method to assess whether inequality in productivity has changed over time. The entropy analysis indicates that the trends for overall entropy did not increase over time for all three crops. Moreover, declining trends in between-group inequality were observed for maize and wheat and remained constant for rice. This result suggests that yields in less productive micro-regions, indeed, have grown faster than yields in more productive micro-regions, at least in the case of maize and wheat. Next, two types of econometric estimations are used to measure whether convergence has occurred in yields of the three crops. The econometric findings are consistent with the GE results and suggest that conditional convergence has occurred in all three crops, which demonstrates that yields in less productive regions converge to those in productive regions, given the control of other factors. However, the process has been rather slow." --from authors' abstract