Agricultural Development and Productivity; Lessons from the Chilean Experience

Agricultural Development and Productivity; Lessons from the Chilean Experience

Agricultural Development and Productivity; Lessons from the Chilean Experience

Agricultural Development and Productivity; Lessons from the Chilean Experience

Excerpt

There is general agreement that agricultural production in Chile for many years has fallen well short of its potential, and that both the great mass of farm people and the economy as a whole have suffered as a consequence. Blessed with a generally equable climate and rich soils, the great Central Valley of Chile has been described by Theodore Schultz as "probably the best piece of farm real estate in the world" outside California. Despite this first- rate natural endowment, Chilean agricultural production in recent decades has barely kept pace with population growth and has fallen well short of the growth in total demand. One important consequence is that scarce foreign exchange has had to be diverted from vitally important capital formation to the financing of imported foods, many of which could be economically produced in Chile if the agricultural sector were more efficiently organized.

This study attempts to make some progress in understanding why the performance of Chilean agriculture has fallen short of its potential. Two approaches to the problem are developed. One focuses on the overall performance of agriculture in the 1950's, making use of such nationwide data as are available but relying for the most part on data obtained from a sample of farms located in the Central Valley. The second approach involves analysis of total-productivity differences between groups of farms in the sample, attempting both to measure the magnitude of these differences and to account for them. These two approaches were adopted in recognition that the total performance of agriculture reflects the play of forces which impinge more or less evenly on all farmers (the first approach) and of those which have a differential impact (the second approach). Full understanding, therefore, requires examination of both sets of forces.

The decision to focus the bulk of the analysis on the 1950's was dictated primarily by the availability of data. However, some evidence is presented indicating that the situation prevailing in the 1950's persisted well into the . . .

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