Research and extension expenditures and productivity in Japanese agriculture, 1960–1990

Abstract

Abstract This paper investigates the cause for the decline in the growth of productivity in Japanese agriculture since the late 1960s. For this objective, it investigates the effects of research and extension (R&E) activities on the extent and the direction of the bias of technological change in Japanese agriculture for the period 1960–90 based on the translog cost function framework. Empirical results show that the cost‐reducing effects of R&E measured in terms of the absolute value of the cost–R&E elasticity increased slightly from 0.194 in 1960 to 0.205 in 1965 and then decreased consistently to 0.110 in 1990. This finding is broadly consistent with the finding of the decline or slowdown in agricultural productivity since the late 1960s. The bias due to R&E was found to be toward labor, intermediate inputs, and other inputs saving on the one hand, and machinery and land using on the other. Labor‐saving and machinery‐using biases are consistent with the Hicksian induced innovation hypothesis.

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