Contents

Technical Change in • Definition of Technical Change

Agriculture • Source of Technical Change in
Agriculture
• Characteristics of Technical
Change
• Adoption and Diffusion of
Technologies
• The Economics of Technical
Change
• Induced Innovation
• Adoption of New Varieties
 Definition of Technical Change
1. Productivity index  The two ways of defining
 Is production of a greater are entirely consistent with
output with a given each other.
quantity of resources.  Both ways commonly
 implies the existence of a referred to as either
production function technical change or
Production function technological change and
used interchangeably
a change in the
parameters of the  It is change in the state of
production function the art Vs
 Is an upward shift in the  change in actual
production function. production techniques.
 4.1 Source of Technical Change in Agriculture
1.Learning by using
 Technological change will take place on the farm as the result
of experience with a given production process.
2. Private and public research and development generated
within the country
 undertaken for commercial or with no specific commercial
objective
3. Imported research and development
 Foreign technology may not always be appropriate to the needs
and conditions in the recipient countries and may generate
indirect costs.
 Indirect costs, would be to select foreign technology for
subsequent modification, through adaptive research, to suit
 4.2 Characteristics of Technical Change
 Realized through improved methods of utilizing available
resources(disembodied technological change)
 It shift the production function.
 Occurs through changes in the quality of inputs utilized
(embodied technological change) measure of input quality
change.
 Expressed in terms of either a reduction in the cost of
production (given input prices) or
 An increase in profits (given output prices).
 Capital saving, neutral, or labor saving
 Has its own direction of technical progress as a result of
relative factor prices ,search for cheaper factor and less of
the expensive one
 4.3 Adoption and Diffusion of Technologies
Adoption  The decision of whether to
 Studies relate to the use or non- adopt will be based on a
use of a particular innovation by careful evaluation of many
farmers at a point in time, or technical, economic and
during an extended period. social factors.
 Analyze the reasons of whether  The more technically complex
and when adoption takes place. the innovation, the less
attractive to many farmers.
Diffusion
 Individuals within a population
 Defined in relation to the
are classified into (i) innovators,
(ii) early adopters, (iii) the early spread of an innovation at the
majority, (iv) the late majority, aggregate level viewed over
and (v) laggards, according to the time.
date of adoption  Is source of technological
change and measured in
successive time periods.
 4.4 The Economics of Technical Change
Economists define technology (technical change) as a stock
of available techniques or state of knowledge concerning
the r/ship b/n inputs & a given physical output.
• Through these change the production function will shift
over some range such that
a) More output can be produced with the same quantity of
inputs.
b) The same output can be produced with a smaller
quantity of inputs.
The impact of technological change can be illustrated with
the factor-product, factor-factor and product-product
 The factor-Product
Adoption of the better-quality
seed(new wheat seed variety)
will shift the total product
curve upwards.
• with fertilizer usage ƒ0, output
can be increased from OA to
OB
• Alternatively, a given output
level, say OA, can now be
obtained with a reduced level
of fertilizer usage Oƒi instead
of Oƒ0)
 The factor-factor(The Isoquant)
• The case of two variable
inputs, say fertilizer and labour
• the isoquant for output level,
Qo, depicts the various
combinations of the variable
inputs which yield that output
level.
• However, under the new
technology the same output
can be obtained with less of
the variable inputs i.e. the
new isoquant (Q'o) for output
Qo shifts towards the origin.
 Product-product (Production Possibilities
Frontier)
• Suppose the farmer produces
two products, wheat and
maize.

• The introduction of the

improved seed variety in
wheat production allows
more wheat to be grown
with the same quantity of
inputs, the frontier swivels to
PPFX
 4.5 Induced Innovation
 Traditionally the process, by which technical change is
generated, is treated as exogenous to the economic system.
 Technologies can be developed to facilitate the substitution
of relatively abundant(Less expensive) factors for relatively
scarce factors(more expensive) .
 Constraints of inelastic supply of land allows substitution
of fertilizer for land, and therefore, can be termed as "land-
saving" technology.
 The Ruttan-Hayami's theory of induced innovation
interpret technical change as endogenous to the economic
system
 Technical change represents a dynamic response to
changes in resource endowments and to growth in
demand.
 4.5.1 Induced Institutional Innovation
 Ruttan defines institutions as "the rules of a society or of
organizations that facilitate co-ordination among people
by helping them to form expectations which each person
can reasonably hold in dealing with others.
• In his model induced institutional innovation, there are
both supply as well as demand dimensions for institutional
change.
Demand for institutional change is induced by either of the
following:-
(a) changes in the relative resource endowments,
(b) changes in product demand,
(c) changes in technology.
 Induced Institutional Innovation

Supply of institutional innovation is strongly influenced by

the cost of achieving social consensus.

• The cost dependent upon the distribution of political

resources, cultural tradition and ideology.
• Education (both general and technical) which facilitates
better understanding among people can also reduce the
cost of institutional innovation
 4.6 Adoption of New Varieties
 Adoption of new varieties (MVs) has had a positive
impact on productivity growth and food security.
 National programs and international organizations have
concentrated their efforts on providing marginalized
smallholders with high-yielding varieties of cash crops by
assisting them in capacity building in new agro-
technology use.
 But the results have been uneven
 Sub Saharan Africa has only seen a 22 percent increase
(FAOSTAT, 2014)
 Causes of Uneven Result
 1st Structural market failures have been demonstrated to
play a fundamental role as causes
 In SSA, the access to chemicals fertilizers, pesticides or
herbicides hampered by important and long lasting market
frictions.
 High transport costs, failures to deliver credit to producers,
price fluctuations, informational barriers and, in general,
poor market infrastructures, can radically reduce the
returns of an investment in intensive agriculture.
 2nd driver of productivity gaps has been non-market
elements.
 Unsuitability to extreme agro-climatic conditions
regardless of the use of recommended rates of agro-
chemicals