Total factor productivity in South African agriculture, 1947‐91

Abstract

Indices of total factor productivity (TFP) measure aggregate output per unit of aggregate input, providing a guide to the efficiency of agricultural production. This article outlines the relationship between production functions and TFP indices. Then, an index is constructed for South African agriculture for the period 1947‐91. The index shows that TFP grew at an average rate of 1,3 per cent per annum. However, TFP growth has increased since the reforms of the early 1980s. Since capital has been more realistically priced relative to labour, greater productivity growth has gone together with increasing employment, which must have improved social welfare.

Notes

Respectively Reader in Agricultural Economics, University of Reading, Lecturer and Professor, Department of Agricultural Economics, University of Pretoria. We would like to thank the Directorate of Agricultural Economic Trends, Department of Agriculture, for excellent support. Rod Gravelet‐Blondin. Neville Vine and especially Neels Meyer made this research project pleasurable and improved the final product.