زیر ساخت ها و رشد بهره وری عمومی در کشاورزی فیلیپین، 1974-2000

We examine the impact of public infrastructure on the productivity performance of Philippine agriculture by applying a translog cost-based model to the regional agricultural data for years 1974–2000. From our results, public infrastructure reduces production cost, thereby enhancing productivity growth in Philippine agriculture. In terms of TFP decomposition, public infrastructure is noted to contribute significantly to productivity growth during the late 1970s, although its contribution is observed to be declining in the 1980s but recovering in the 1990s. The decline had been triggered by the reduced provision of public infrastructure. On the other hand, the improvement in its contribution in recent years has not helped reverse the overall decline of productivity growth. In this paper, we establish the importance of roads in terms of altering input demand and enhancing productivity in Philippine agriculture.

Agricultural production in the Philippines stagnated in the 1980s, growing at an average of 1% per year. However, from 1990 to 1995, the growth rate increased to 1.4% but declined to 0.60% from 1996 to 2000 (Bureau of Agricultural Statistics, 2002 and David, 1996). This decrease in agricultural production has been attributed to the observed declining productivity in the agricultural sector (Mundlak, Larson, & Butzer, 2002; Teruel & Kuroda, 2004). The loss of agricultural productivity should be of particular concern to the government if the country is to continue pursuing a policy of self-sufficiency in food and/or if the dependence of the mostly poor rural population on agriculture remains considerably high. Without new government initiatives to improve the productivity level in agriculture in a sustained manner, the country's effort to generate broad-based economic development and further reduce poverty will be undermined. It has been shown that the dismal performance of the agricultural sector correlates with or has deleterious effects on the overall growth of the Philippine economy (Balisacan, 2001; Pingali, Hossain, & Gerpacio, 1997). The question is, thus, what are the underlying causes of the poor performance of Philippine agriculture. Declining agricultural productivity is a phenomenon observed in most developing countries. Some studies have clearly shown that the decline in productivity was observed even in developing countries where Green Revolution varieties of rice and wheat have been widely adopted (Fulginiti & Perrin, 1997; Hayami & Kikuchi, 2000). Most of the development specialists attributed this to monoculture production or intensive cropping systems. In the Philippines, David (2003) has argued that the poor agricultural performance has not been so much due to market factors, but rather to weaknesses in the policy and institutional frameworks governing the sector. Fulginiti and Perrin, 1993 and Fulginiti and Perrin, 1997 have specifically studied the effects of price discrimination and other related policies on agricultural productivity for 18 developing countries covering years 1961–1985. Empirical evidence shows that price-depressing policies reduce productivity with an elasticity of 0.13. They have pointed out that those countries with higher taxation show more regression than those with little or no taxation at all. Based on their analysis, Philippine agricultural productivity could have been increased by 1.3% through the elimination of direct government intervention (commodity price intervention) and 4.1% by the removal of indirect intervention (real exchange rate distortion and protection afforded to non-agricultural sector). The declining agricultural productivity in the Philippines can also be an indication of deficiency in terms of support systems provided by the government for agricultural development. The low priority afforded by the government to agriculture has been very well documented (Balisacan, 1987 and Bautista, 1987; Intal & Power, 1990). In this paper, we attempt to look at another viewpoint that may explain the loss of productivity in Philippine agriculture. The dismal productivity performance of the agricultural sector starting in the 1980s might have been exacerbated by the severe debt crisis during the decade as this encouraged cut in public spending on core infrastructure and other production-oriented government investments like research, irrigation and credit. In recent years, there has emerged a consensus among experts in the field that public investment policy has continued to be less favorable to the agricultural sector. This assertion can be indicated by the shift in the composition of government expenditures from productivity-enhancing investments such as irrigation, research and community/rural roads development towards agrarian reform, environment and natural resource management. We will, therefore, examine the impact of public infrastructure on the productivity performance of Philippine agriculture. Using a Cobb–Douglas (C–D) aggregate production function, Aschauer (1989) was the first to empirically show the strong positive impact of the public-to-private capital stock ratio to productivity in the United States. Specifically, he found out that a 1% increase in the public capital stock would result in an increase in total factor productivity (TFP) by almost 0.40%. Thus, he attributed the decline in US TFP growth in the 1970s to lower public investment spending. Although the C–D framework used by Aschauer (1989) has the virtue of simplicity, this simplicity comes at the cost of imposing restrictions such as the unitary elasticities of substitution. Thus, the use of C–D production function in assessing the productivity effect of public capital stock has been the main source of discord among empiricists. Under the C–D framework, only the direct effects or productivity effects of public capital, which enters the production process as intermediate input, are being accounted for. This does not capture the indirect or factor bias effects of public capital or specifically the possible complementary relationship between the private and public capital stocks (Sturm & Kuper, 1996). To account for these indirect effects, we employ the dual approach using a cost function in this paper.1 This approach requires postulation of a functional form for the cost function, which satisfies the appropriate theoretical properties. In this study, we use a flexible translog functional form for our cost function proposed by Christensen, Jorgenson, and Lau (1973). This functional form is less restrictive because it places no a priori restrictions on the production structure and it is a second-order Taylor's series in logarithm. In essence, this functional form allows for quadratic and interaction terms in addition to the usual linear terms. The translog cost function is appropriate to use in assessing the productivity impact of public infrastructure in Philippine agriculture because this does not rely on the assumption of constant returns to scale and allows for non-neutrality and non-homotheticity of technology. It has been established that the production in Philippine agriculture is characterized by diseconomies of scale and the technology is non-neutral and non-homothetic (Teruel & Kuroda, 2004). To carry out the empirical investigation, the cost function is augmented with specific public infrastructure measured in actual physical terms such as irrigation (farm areas with irrigation facilities), roads (road length in kilometer) and rural electrification (proportion of actual to potential energy connection). The use of these specific categories of public infrastructure in actual physical terms and directly linking them with productivity growth through decomposition analysis via cost function is a sensible point of departure from previous studies based on duality theory. A plethora of literature on the effects of public infrastructure on productivity has used stock of public infrastructure based on public investment data and derived by applying the perpetual inventory method. This is not done in this study because of the unavailability of time and cross sectional data on public expenditure on infrastructure. Expressing public infrastructure in actual physical terms can be justified since the use of perpetual inventory methods may introduce systematic errors in infrastructure stock estimates (Canning, 1998 and Pritchett, 1996). On the other hand, the inclusion of different categories of public infrastructure into the analysis can generate more relevant information and allow specific comparative analysis. Using a data set for Philippine agriculture covering 12 regions and years 1974–2000, we evaluate the productivity effects of public infrastructure by computing cost-based economic indicators such as the factor bias effects, cost elasticity and total effects of public infrastructure. We also adopt an alternative approach, which is actually a variant of Morrison and Schwartz (1996) methodology and proposed by Mamatzakis (2003). This approach decomposes productivity into the impacts of technological change, scale economies and the provision of public infrastructure. There is still a continuing debate as to the productivity effect of public infrastructure. Most of the studies conducted have been confined to developed countries (Evans & Karras, 1994; Holtz-Eakin, 1994; Morrison & Schwartz, 1996) and very few deal with the agricultural sector (Antle, 1983 and Mamatzakis, 2003). We, therefore, seek to widen the existing literature concerning the measurement of the impact of public infrastructure on the agricultural sector of a developing country.2 As of 2001, the road density in the Philippines is 0.63 per km−2. On the other hand, only 80% of the total number of barangays (barrios) has been energized or only 70% of the potential have electricity. The status of irrigation development is only 43.9%, implying that the proportion of potential irrigable areas with irrigation facilities is less than 50%. The remainder of this paper is organized as follows: Section 2 deals with the methodology, particularly on the translog cost function framework. The data set is described in Section 3. Estimation and empirical results are discussed in Section 4 and the conclusion is finally presented in Section 5.

In this paper, we have examined the impact of public infrastructure on the productivity performance of Philippine agriculture by applying a cost-based model to the regional Philippine agricultural data for years 1974–2000. Specifically, we used a translog cost function framework augmented with public infrastructure such as irrigation, roads, and rural electrification. From our results, public infrastructure has been found to be a substitute for labor and intermediate inputs. There exists, however, a complementary relationship between public infrastructure and private capital input which supports the public capital hypothesis. Public infrastructure reduces production cost, thereby enhancing agricultural productivity. The cost-saving impact averages 0.28%; thus, public infrastructure enhances comparative competitiveness of Philippine agriculture. On the average, irrigation reduces costs by 0.12%, roads by 0.71% and rural electrification by 0.01%. To quantify the individual contribution of public infrastructure to productivity growth, we computed the TFP and conducted a decomposition analysis. Higher TFP estimate is noted during the late 1970s, but this was followed by a dramatic decline in the 1980s and 1990s. The higher productivity growth from 1974 to 1980 had been driven by public infrastructure. Its productivity contribution, however, decreased markedly especially in the 1980s but recovered in the 1990s. In the 1980s, technological change was found to drive productivity growth, although its contribution was not sufficient to sustain the productivity level of the late 1970s. In the last decade, the recovery of productivity contribution of public infrastructure did not reverse the overall trend in TFP growth. The continued decline in productivity growth can be attributed to the decreased contribution of technological change and the strong negative effect of scale economy. Overall, for the entire period, TFP grew at an annual average growth rate of 1.42%. The contributions of technological change and public infrastructure are comparable, with provision of farm-to-market roads seen to play an important role. In this paper, we therefore, provide empirical evidence that the observed decline in Philippine agricultural productivity could be partly explained by the reduced provision of rural infrastructure. The findings also hold special importance since this may imply that the recent shift in the composition of government expenditures from irrigation, research and community/rural road development to agrarian reform, environment and natural resource management might have depressed the productivity as well as the output growth in Philippine agriculture.