AN EXAMINATION OF AGRICULTURAL PRODUCTIVITY AND RETURNS TO AGRICULTURAL RESEARCH IN TURKEY

W. Hartley FURTAN, Alper GÜZEL, Giannis KARAGIANNIS, Ahmet  BAYANER

The Turkish economy is dependent upon the agriculture sector as a source of employment and economic growth.  Agriculture makes up about 15% to 16% of the Turkish GDP and more than one-third of the population as such is very important.  The productivity growth of the sector is extremely important if the government wishes to have food prices not increase for a population that is growing at approximately 1.7% per annum.

            This paper reviews the current economic methods for estimating agricultural productivity.  We then proceed to estimate the growth in Total Factor Productivity (TFP) for the period 1967-97.  TFP is the ratio of an output index and an input index.  We made a detailed search of input use and output production for Turkish agriculture for the entire period (all data is reported on a disk).  Much of this data has not been brought together before for the agriculture sector in Turkey and as such represents a contribution in its own right.

We then estimated the TFP using the Tornqvist index. Our results show that the TFP increased at an annual rate of 4.07% over the entire period.  However when we examine the period 1967-88 the growth was 5.58% and for the period 1988-96 the growth rate was -0.06%.  This lower growth rate suggests that the productivity growth in the sector has stopped; a major concern for the Turkish government.  We also found that the TFP index and Research an Development index in Turkish agriculture are cointegrated. The econometric estimation yielded a long-run Research and Development expenditures elasticity  TFP around unity.

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