PRICE PROTECTION AND PRODUCTIVITY GROWTH

This study provides empirical evidence on the relationship between pri ce protection and productivity growth. From theoretical considerations , it is concluded that the impact of price protection on productivity growth is ambiguous. Although protectionism may in some instances stim ulate investment and adoption of new technologies, efficiency may decr ease, particularly when farm prices and income are high. Empirical evi dence from the New Zealand beef/sheep industry indicates that high pro tection during the 1975-85 period produced negative productivity growt h. Following market liberalization in 1985, productivity growth increa sed substantially.