DETERMINANTS OF PRODUCTIVITY CHANGE USING A PROFIT FUNCTION - SMALLHOLDER AGRICULTURE IN ZIMBABWE

The concept of total factor productivity (TFP)-the ratio of quality-ad justed output to input-is straightforward. Yet explaining productivity change, and attributing residual output growth to its appropriate sou rces, raises numerous problems. It has long been argued that technical change, policy reform, and institutional innovation are complements a nd are all required to achieve sustained productivity growth (Johnson; Lipton; Evenson and Kramer; Binswanger and Pingali). However, in expl aining productivity growth, the emphasis usually is put on weather and on investments that generate new technology, which farmers must be ed ucated to use (usually public sector research and development expendit ures, extension, farmer education). While these factors are undoubtedl y important, the conventional approach (see Echeverria for a survey) h as often neglected the role of policies and investments at other stage s of the agricultural system affecting farm technology adoption. The d anger of the conventional approach is that it may not adequately measu re policy effects on productivity through their influence on input and output prices. The conventional approach may therefore provide mislea ding implications for promoting productivity growth. Weak infrastructu re and institutions can prevent the potential gains from R&D from bein g realized. If these factors are necessary complements to R&D, their c osts should be included in evaluating the returns to R&D (Howard, Chit alu, and Kalonge). Our objective is to consider how the endogenization of prices in productivity models may substantially widen the range of variables perceived to affect farm-level productivity change. We appl y this model to account for productivity change in Zimbabwe's smallhol der sector, based on a dual normalized, restricted profit function for the period 1975-90. Zimbabwe has been one of the few African countrie s receiving widespread acclaim for an alleged ''agricultural success s tory.'' Identifying the sources of Zimbabwean smallholder productivity growth has important implications for agricultural growth strategies elsewhere in Africa.