Total Factor Productivity Growth in Agriculture: The Role of Technological Capital

In this chapter the authors compute measures of total factor productivity (TFP) growth for developing countries and then contrast TFP growth with technological capital indexes. In developing these indexes, the authors incorporate schooling capital to yield two new indexes: Invention-Innovation Capital and Technology Mastery. They find that TFP performance is strongly related to technological capital and that technological capital is required for TFP and cost reduction growth. Investments in technological capital require long-term (20- to 40-year) investments, which are typically made by governments and aid agencies and are the only viable escape route from mass poverty.