J Prod Anal (2010) 33:209–223
DOI 10.1007/s11123-009-0156-4
Comparisons of agricultural productivity growth in China
and India
Alejandro Nin-Pratt • Bingxin Yu • Shenggen Fan
Published online: 30 October 2009
 Springer Science+Business Media, LLC 2009
Abstract We measure and compare agricultural total
factor productivity (TFP) growth and its components
(efficiency and technical change) in China and India and
test the TFP series for the existence of structural breaks
relating the evolution of TFP to policy milestones. Our
results show that agricultural TFP growth accelerates in
China after 1979 and in India after 1974, although China’s
agricultural sector clearly outperforms India’s. The main
explanation of these differentials is that agricultural growth
in China benefited from more fundamental institutional and
policy reforms in agriculture than India. There is some
evidence that the transformation of industry in China was
also important for agricultural TFP growth. Manufacture
growth absorbed labor and reduced employment in agri-
culture, creating incentives for capital investment and
technical change that kept output per worker in agriculture
growing at high rates. Fewer changes in agricultural poli-
cies and in the dynamics of manufacturing in India resulted
in slower growth in agricultural productivity, despite policy
changes that accelerated economic growth in recent years.
Keywords Agriculture  China  Comparison  India 
Malmquist index  Policies  Structural change 
Total factor productivity
JEL classification C61  O33  O57  Q16  Q18
A. Nin-Pratt (&)  B. Yu  S. Fan
IFPRI, 2033 K Street, NW, Washington DC20006, USA
e-mail: a.ninpratt@cgiar.org
1 Introduction
Rapid economic growth and the similarities and differences
between the economies and policies in place in China and
India in the past two decades have stimulated interest in the
analysis and comparison of economic performance and
long-term development of the two Asian economies. China
and India are similar in that both countries are large geo-
graphically and have enormous populations which remained
poor during most of the twentieth century. Since the 1950s
these two countries adopted very different political systems
but despite these differences, they followed similar devel-
opment strategies. During the 1950, 1960 and 1970s both
countries pursued industrialization through central plan-
ning, the promotion of heavy industry and state enterprises;
both followed relatively autarkic trade policies with state
trading and trade and exchange controls; and they both
discriminated against agriculture through direct and indirect
taxes (Lal 1995). Between 1979 and 1985, both countries
launched reforms, becoming increasingly open to interna-
tional trade and investment, accelerating industrialization
and expanding exports of manufactured goods (Anderson
2003). As a result of these changes, GDP per capita has more
than doubled in India and increased a remarkable sevenfold
in China.
Significant contrasts can be found between China and
India in the performance of different sectors after the
reforms. In the case of China, initial growth was triggered
by rapid agricultural growth after the decentralization of
production from collectives to individual households. The
later rapid expansion of the economy was achieved by
explosive growth in its industrial sector, fueled by China’s
aggressive policies to lower its trade barriers and to attract
foreign direct investment. In contrast, reforms in India
during the 1980s were less aggressive. Only in 1991 and as
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a response to fiscal and balance of payment crisis did India
launched widespread economic reforms (Chopra et al.
1995). These changes have imposed structural adjustment
pressures on agriculture in both countries. China’s agri-
cultural GDP growth rate has been almost twice that of
India’s, with less than 10% of China’s population
remaining below the poverty line when the international
poverty line of one dollar per day is used, compared with
more than one-third of India’s population (Gulati and Fan
2007). How could these differences been explained?
The differences and similarities between the economic
systems and the growth process in China and India offer a
unique opportunity to compare the evolution of agricultural
total factor productivity (TFP) in both countries, relate
trends in productivity with policy changes and identify
differences in the implementation of the reforms that
explain the different performance of agriculture in these
countries. As discussed in Gulati and Fan (2007), this
comparative study of the evolution of agricultural TFP in
China and India, is important first, because each country’s
experience holds lessons for the other; and second because
a better understanding of agriculture’s performance in
these economies may help draw policy implications for
economic development in other developing economies.
Although several studies in the past have focused on the
analysis of agricultural TFP in China and India (see foot-
note),1 only two comparative studies (Wong 1989; Nin-
Pratt et al. 2008) explicitly devoted to agricultural pro-
ductivity seem to appear in the literature. The study by
Wong covers the period 1964–1983 and does not capture
the last two decades of steady growth in China and the
reform period in India. The study by Nin-Pratt et al. goes
up to 2003 but focuses on the measurement of returns to
R&D investment.
The objective of this paper is to understand the struc-
tural differences in agricultural growth patterns between
China and India by measuring and comparing agricultural
TFP growth and its components, namely efficiency and
technical change in these countries, covering the period
1961–2006. We also relate the evolution of TFP to policy
milestones and derive implications for agricultural growth
in both countries. The TFP measure is used here for
comparison because it reflects the major potential source of
growth in the agricultural sector, as both countries are
1
See for the case of India: Bhushan (2005), Dholakia and Dholakia
(1993), Evenson et al. (1999), Evenson and McKin (1991), Fan et al.
(1999), Janaiah et al. (2006), Kaur and Sekhon (2005), Kumar et al.
(2004), Mahadevan (2003), Murgai (2001), Roy and Pal (2002),
Upender (2005).
For China: Brummer et al. (2006), Carter et al. (2003), Chen and
Ding (2007), Fan and Zhang (2002), Jin et al. (2002), Kalirajan et al.
(1996), Liu and Wang (2005), Mao and Koo (2002), Mead (2003),
Wang and Kalirajan (2002), Wen (1993), Wu et al. (2001) and Zhang
and Carter (1997).
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J Prod Anal (2010) 33:209–223
constrained by land and other resources available for
agriculture.
The paper is organized as follows. We first present the
stylized facts and milestones of the development strategies
and policies applied by China and India during the period
covered by our database. We then define the concept and
present the methodology used to measure TFP. In Sect. 4
we compare growth in TFP, technical change and effi-
ciency improvement by constructing our own estimates. In
the fifth section we discuss the methodology used to link
the evolution of TFP to policy milestones and we present
results of this analysis in Sect. 6. The last section makes a
few conclusions.
2 Comparison of economic process and reforms
2.1 Pre-reform period
In general, and despite differences in political organization
and institutions (India is an open, participatory, multiparty
democracy, while China has a one party regime) economic
development models in China and India during the 1950,
1960 and 1970s were based on dirigisme and central
planning, pursuing a high degree of self-sufficiency with
trade restrictions and high barriers to trade (see Table 1).
After the People’s Republic of China was formally
established in 1949, the transition to socialism started with
the first 5-year plan which determined the confiscation of
land and its redistribution to peasants followed by the
collectivization of agriculture through cooperatives and the
socialization of virtually all industry and large-scale com-
merce (see Perkins 1988).2 At this time, agriculture in
China was affected by implicit taxation in the form of
depressed prices for farm products, neglect of public
infrastructure in rural relative to urban areas, and capital
outflows via the financial system (Huang and Ma 1998).
While implementing these policies to foster manufacturing
development that implied negative incentives for agricul-
ture, by the late 1960s and 1970s, China began to use
improved seeds and fertilizer and to invest heavily in irri-
gation (see Gulati and Fan 2007).
As in the case of China and despite its market economy,
India’s goal of economic self-sufficiency and development
after independence was to be achieved by: central planning;
price controls; nationalization of large enterprises; highly
regulated international trade with high level of protection
and restrictions for exports; taxing of agriculture; subsidies
to urban and labor intensive industries; and state production
2
This process was disrupted by political campaigns that had a
negative impact on the economy such as the Great Leap Forward
(1958) and the Cultural Revolution (1966–1976).
J Prod Anal (2010) 33:209–223 211

Table 1 Major policy and political milestones in China and India since 1949
China India

1949–1952 Confiscation of land of the landlord class 1949–1952
and redistribution to peasants
1953–1957 First 5-year plan: collectivization of agriculture through 1961–1966
cooperatives and socialization of industry and large-
scale commerce
1958–1960 Great Leap Forward: agricultural producers’ 1965–1966
cooperatives, amalgamated into communes
1966–1976 Cultural revolution: not major changes in official 1972–1975
economic policies but affected the economy through
political activity, disruption of transportation and
shortages of raw materials
1977–1978 End of autarky policies and open up of the economy; 1979
China returned to IMF and FDI is encouraged
1979–1982 Free up of rural trade fairs or ‘‘free markets’’ and 1980
household responsibility system: de-collectivization
and move to individual household farming
Early 1980s R&D system for agriculture reached its peak turning out 1985–1988
a constant stream of varieties
1984–1985 Industrial reform: development of markets for inputs 1991–1994
to 1992 and outputs; incentive to managers; tax reform;
bankruptcy law; bank credit and development of
financial system; introduction of competition
Dec 2001 Accession to WTO: Commitments to significantly 2001
reduce tariffs; eliminate state trading import
monopolies; eliminate trade-distorting requirements
and export subsidies on agricultural and industrial
goods; enterprises with the right to import and export
all goods (with limited exceptions)
a
The period of the Green Revolution is defined based on the paper by Evenson and Gollin (2003) who distinguish between an ‘‘early Green
Revolution’’ period (1961–1980) and a ‘‘late Green Revolution’’ period (1981–2000)
Source: Authors based on Anderson (2003), Evenson and Gollin (2003), Joshi and Little (1994), Lal (1995), Lin (1992), McMillan et al. (1989),
Mullen et al. (2005), Naughton (1994), Panagariya (2004), Perkins (1988) and Wu (1995)
Economic self-sufficiency; land reform with
redistribution of land to small and landless
producers; price controls; nationalization of large
enterprises; highly regulated international trade;
taxing of agriculture and subsidies to urban
industries; promotion of labor intensive industries;
Five year plan tried to improve support to agriculture.
Green Revolutiona: introduction of high yielding
varieties, agricultural subsidies for fertilizers,
irrigation and power
Growth of inflation fueled by agricultural price
shocks after droughts of 1965 and 1966 resulted in
first economic crisis
Poor harvests, increase in domestic demand, oil shock
result in balance of payment crisis, inflation and
political unrest. Resulted in a second major
economic crisis in 1974–1975. Measures to increase
food availability were issued
Severe drought, increase of oil prices and
deterioration of macroeconomic conditions
triggered new crisis
Recovery of agriculture. Subsidies to farmers for
fertilizer, irrigation and electrical power increase
sharply and continue to grow during the 1980s
Early reforms: relaxation of import controls;
reduction in the shares of gov. imports; introduction
of export incentives; relaxation of industrial
controls; realistic exchange rate results in
accelerated growth
1980s growth was fuelled by a build up of external
debt that culminated in the fourth economic crisis in
1991 that lead to reforms (July package):
Deregulation of industry; reduction of public sector
monopoly; merchandise trade liberalization and
elimination of import licensing; tariff reduction and
reduction of restrictions to agricultural exports;
lifting of exchange controls; flexibility for FDI in
services, flexible exchange rate regime
Because of WTO commitments, abolition of
quantitative restrictions on imports; reduction of the
list of industries reserved solely for production by
the public sector or by small scale producers. Little
liberalizing effect because of high ceiling bindings,
above applied rates

monopolies in some sectors considered strategic. The agri-
cultural production system was based on the private own-
ership of major production assets including land, but there
was also heavy state intervention through input and output
subsidies and restrictions on domestic and international trade
(Lal 1995). While implementing these policies, India laun-
ched the Green Revolution and the Community Develop-
ment Program. These programs put strong emphasis on
training, extension services, and research to change the
attitudes of rural people toward the use of new technology.
The government also promoted development of cooperative
credit; processing of agricultural products; marketing; small-
scale industries; community projects; consolidation of
fragmented farm land and the use of agricultural subsidies to
facilitate the introduction of seed-water-fertilizer technology
(Wong 1989). These programs resulted in a substantial

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increase in the production of food grains, mainly wheat and
rice. Yields of cereals continued to increase during the 1980s
but at lower rates than in the 1970s. By 1980, almost 75% of
the total cropped area under wheat and 45% of the area under
rice were sown with high-yielding varieties. Four major
economic crises marked the evolution of India’s economy
during the pre-reform period: 1965–1966, 1974–1975, 1979
and 1991. Policy changes after each crisis resulted in changes
in the treatment of agriculture given the incidence of food
prices and imports on inflation and the balance of payments.
2.2 Reforms
China began to reform its centrally planned economy in the
late 1970s by freeing up rural markets to commercialize
agricultural production and by decentralizing its production
units in agriculture from collective to individual households
(the Household Responsibility System). These changes
represented a major milestone, signaling the beginning of
reforms (information on reforms presented here is from
Perkins 1988; McMillan et al. 1989; Lin 1992; Naughton
1994).
The aims of the early reforms were to gradually dereg-
ulate the market and allow prices to reflect market condi-
tions. This process started with non-strategic commodities
such as vegetables, fruit, fish, livestock, and oil and sugar
crops. Later, the right to private trading was extended to
include surplus output of all categories of agricultural
products after contractual obligations to the state were
fulfilled (Rozelle et al. 1997). These changes resulted in
rapid growth of agricultural production and they also
reduced significantly the nominal rates of agricultural pro-
tection (Anderson 2003). By 1993, Chinese agriculture had
become a largely market driven economic sector and both
production and productivity grew at an extraordinary pace.
Industrial and macroeconomic reforms started in the mid-
1980s following a gradualist approach with full scale
reform implemented after 1992. Changes include the
development of markets for inputs and outputs and the
introduction of competition; incentive to managers to
increase profits and efficiency; tax reform; institutional
changes (e.g., the introduction of a bankruptcy law); and
development of the financial system. Liberalization of the
economy and of the agricultural sector is expected to con-
tinue given China’s commitments in its WTO Protocol of
Accession.
India began to implement economic reforms in the mid-
1980s, ‘‘quietly and without fanfare’’ (Panagariya 2004).
According to Panagariya, the process of reforms picked up
significantly only in 1985 after a timid start in the 1970 and
changes were largely in place by early 1988. Panagariya
divides these reforms into five categories. First, the list of
products not requiring an import license was steadily
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J Prod Anal (2010) 33:209–223
expanded (Open General License list, OGL), including
capital goods and inputs. The second source of liberaliza-
tion was the decline in the share of monopoly rights of the
government for the import of certain items. Third, several
export incentives were introduced or expanded, increasing
imports directly when imports were tied to exports and
indirectly by relaxing the foreign exchange constraint. The
fourth source of liberalization was a significant relaxation
of industrial controls, and the fifth and most important
source of liberalization according to Panagariya was the
depreciation of the rupee, correcting the overvaluation of
the real exchange rate.
The reforms of the 1980s gave way to more systematic
and deeper reforms including reduction of industry and
trade regulation in 1991 and beyond. The deregulation of
industry was achieved through the so called ‘‘New Indus-
trial Policy’’, which eliminated investment licensing and
the public sector monopoly in many sectors, and initiated a
policy of automatic approval for foreign direct investment.
The 1991 reform package also moved ahead of the 1980s’
approach of selective trade liberalization by replacing the
positive list approach of license-free items with a negative
list approach to further remove constraints in trade.
Reforms also addressed tariffs including merchandise trade
liberalization and extended liberalization to trade in ser-
vices as well (Panagariya 2004). These economy wide
reforms of the 1980s and 1990s were the ones mainly
altering incentives for farmers given that no major changes
occurred in agriculture specific measures: exports of farm
products from India had been restricted by numerous
controls, and the Uruguay Round Agreement on Agricul-
ture commitments made by India had little liberalizing
effect. Among the changes in economic policy affecting
agriculture, Anderson (2003) mentions: the switch from a
fixed to a flexible exchange rate regime that enabled the
abolition of import licensing on capital and intermediate
goods; the removal of quantitative restrictions on imports
of final consumer goods abolished in 2001 following a
WTO dispute settlement; the elimination of the list of
industries reserved solely for production by the public
sector and of industrial licensing, and the reduction after
2001 of the list of items (some 800) reserved for production
by the small scale sector.
Figure 1 graphically summarizes the evolution of poli-
cies followed by China and India between 1961 and 2004
showing changes in the Nominal Rate of Assistance (NRA)
to agriculture. In China, policies previous to the reforms of
1979 clearly neglected agriculture and resulted in a nega-
tive rate of assistance to the sector. The net effect of pol-
icies on agriculture changed after the reforms with a rapid
increase in the rate of assistance until it becomes positive
and stabilizes after 1992. In India the NRA fluctuates
around zero, with negative assistance between 1971 and
J Prod Anal (2010) 33:209–223 213

0.5
China India estimation, which in many cases are not available for
0.4 international comparisons. Most important for this study is
0.3 its ability to decompose productivity growth into two
0.2
mutually exclusive and exhaustive components: changes in
0.1
0 technical efficiency over time (catching-up) and shifts in
-0.1 technology over time (technical change).
-0.2
To define the output-based Malmquist index we assume,
-0.3
-0.4 as in Färe et al. (1998), that for each time period t = 1,…,T
-0.5 the production technology describes the possibilities for the
-0.6
transformation of inputs xt into outputs yt. This is the set of
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
output vector y that can be produced with input vector x.
Fig. 1 Nominal rate of assistance for all primary agriculture, value of For the technology in period t and with yt 2 Rm þ outputs and
production-weighted average. Source Anderson and Valenzuela xt 2 Rnþ inputs:
(2008) Estimates of Distortions to Agricultural Incentives, 1955–
2007, spreadsheet at www.worldbank.org/agdistortions, World Bank, Pt ð xÞ ¼ fyt : such that xt can produce yt g ð1Þ
Washington DC
The frontier of the output possibility space for a given input
1980 although the NRA increases from very low values vector is defined as the output vector that cannot be
after the crisis of 1974–1975. A high increase in subsidies increased by a uniform factor without leaving the set. In
for agriculture in the 1980s determined positive rates of our analysis we will refer to these production units as
assistance during this period. The rate of assistance to countries.
agriculture sees a new reduction during the 1991 crisis and Two different approaches have been used to define
reforms, and recovers in the 1990s although the economic nonparametric distance functions using DEA: the envelope
reforms did not resulted in significant changes in the rate of form and a dual equivalent approach that can be derived
assistance when compared to previous years. from the envelope or primal form (see Kuosmanen et al.
2004). The envelope approach is normally preferred to
estimate distance and efficiency because it requires fewer
3 TFP measures constraints than the dual form. On the other hand, the dual
form has the advantage of a more intuitive specification,
In this section we define the concept and present the offering also an economic interpretation of the problem. It
methodology used to measure agricultural TFP in China also allows an explicit estimation of input and output
and India between 1961 and 2006. Efficiency and techno- shadow prices, which are actually the weights used by this
logical progress, or the growth of TFP, is the best approach to aggregate inputs for the TFP estimation (Coelli
expression of the efficiency of economic production and and Rao 2001). We present here only the dual form of the
the prospects for longer term increases in output. It shows linear programming problem.
the relationship between growth of output and growth of The dual linear program measures efficiency as the ratio
input, with productivity being raised when growth in output of a weighted sum of all outputs over a weighted sum of all
outpaces growth in input (see discussion on the concept of inputs. The weights are obtained solving the following
TFP on Lipsey and Carlaw 2001). Productivity growth problem (Coelli and Rao 2001):
without an increase in inputs is the best kind of growth to ,
X m Xn
aim for rather than attaining a certain level of output by max pk yik wj xij
increasing inputs, since these inputs are subject to dimin- p;w
k¼1 j¼1
ishing marginal returns. subject to
The Malmquist index, pioneered by Caves et al. (1982) ,
Xm Xn
and based on distance functions, has become extensively pk yik wj xij  1 i ¼ 1; . . .; r
used in the measure and analysis of productivity after Färe k¼1 j¼1
et al. (1994) showed that the index can be estimated using pk ; w j  0 k ¼ 1; . . .; m; j ¼ 1; . . .; n ð2Þ
Data Envelopment Analysis (DEA), a non-parametric
approach that uses linear programming (LP) to estimate where the optimal weights pk and wj are, respectively output
distances. The non-parametric Malmquist index has been k and input j shadow prices. Problem (2) clearly shows the
particularly popular since it does not entail assumptions intuition behind this approach to measure efficiency but
about economic behavior (profit maximization or cost cannot be used as such because it has an infinite number of
minimization) and therefore does not require prices for its solutions. To solve that problem we normalize the ratio by

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P
n
imposing wj xij ¼ 1 (Coelli and Rao 2001). With this new exhaustive components: efficiency change and technical
j¼1
constraint, the dual problem becomes the following (with change. These results applied to the different period-based
Malmquist indices.
p and w different from q and x):
Dtþ1
o ðx
tþ1 tþ1
;y Þ
X
m Mo ¼
D o ðx t ; yt Þ
t
max qk yik  t tþ1 tþ1 1=2
q;x k¼1 D o ðx ; y Þ Dto ðxt ; yt Þ
 tþ1  ð6Þ
s:t: Do ðxtþ1 ; ytþ1 Þ Dtþ1 t t
o ðx ; y Þ
X n
The ratio outside the square brackets measures the change
xj xij ¼ 1 ð3Þ
j¼1
in technical efficiency between period t and t ? 1. The
X
m X
n expression inside brackets measures technical change as
qk yik i  xj xij  0 i ¼ 1; . . .; r the geometric mean of the shift in the technological frontier
k¼1 j¼1 between t and t ? 1 evaluated using frontier at t and at
qk ; xj  0 k ¼ 1; . . .; m; j ¼ 1; . . .; n t ? 1, respectively as the reference. The efficiency change
component of the Malmquist indices measures the change
Kuosmanen et al. (2004) generalize the dual interpretation in how far observed production is from maximum potential
of the distance function to the case of closed, nonempty production between period t and at t ? 1, and the technical
production sets satisfying scarcity and no free lunch, change component captures the shift of technology
showing that the distance has the following dual between the two periods. A value of the efficiency change
formulation: component of the Malmquist index greater than one means
 t 
qy qyt that the production unit is closer to the frontier in period
Dt0 ðxt ; yt Þ ¼ max :  18ðy t t
; x Þ 2 L t
ð4Þ t ? 1 than it was in period t: the production unit is
xxt xxt
catching-up to the frontier. A value less than one indicates
Dt0 ðxt ; yt Þ represents the distance of a production unit using efficiency regress. The same range of values is valid for the
input x to produce output y in period t to the frontier of the technical change component of total productivity growth,
production possibility space (PPS) in period t. Distances of meaning technical progress when the value is greater than
production points in period t relative to the frontier in one and technical regress when the index is less than one.
period t ? 1 or of production point in period t ? 1 relative However, we rule out the possibility of technical regression
to the frontier in period t are also needed to estimate the in our estimates by assuming a sequential technology as in
Malmquist index. The distance measure equals 1 when the Nin et al. (2003).
production point in period t is on the frontier for period t.
The optimal weights qk and xj are respectively output k
and input j shadow prices with respect to technology Lt. 4 Measures of agricultural TFP in China and India
There exists a vector of shadow prices for any arbitrary
input–output vector; however, these prices need not be In this section we present results of our estimates of the
unique. The Malmquist index measures the TFP change Malmquist TFP index and its efficiency and technical
between two data points (e.g., those of a country in two change components for Chinese and Indian agriculture.
different time periods) by calculating the ratio of the The data used are from FAOSTAT 2008, the statistical
distance of each data point relative to a common database of the Food and Agriculture Organization of the
technological frontier. Following Färe et al. (1994), the United Nations (FAO 2008). Two outputs (crop and live-
Malmquist output oriented index between period t and stock production) and six inputs (land, labor, tractors,
t ? 1 is given by: fertilizers, feed and animal stock) covering the period
 1=2 1961–2006 for sixty countries3 including China and India
Mo ¼ Mot  Motþ1 were used to estimate the Malmquist index and the effi-
 t tþ1 tþ1 
tþ1 tþ1 1=2
Do ðx ; y Þ Dtþ1 o ðx ;y Þ ciency and technical change components. Output indices
¼  ð5Þ
Dto ðxt ; yt Þ Dtþ1 t t
o ðx ; y Þ
3
The sample of countries used to determine the PPS in this study
which is a geometric mean of two Malmquist indices: one includes countries from East, South and Southeast Asia, North Africa
using the technology frontier in period t as the reference, and the Middle East, Europe, North and Latin America, and Oceania.
and a second index that uses frontier in period t ? 1 as the No Sub-Saharan African countries with the exception of South Africa
are included given that the use of inputs of many of these countries is
reference.
quite different from that in countries of other regions. In this way we
Färe et al. (1994) showed that the Malmquist index try to reduce the likelihood of having outliers in the PPS that can
could be decomposed into two mutually exclusive and affect productivity measures for China and India.

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J Prod Anal (2010) 33:209–223
for livestock and crops elaborated by FAO were used to
measure changes in outputs. The indices show the relative
level of the aggregate volume of crop and livestock pro-
duction for each year in comparison with the base period
1999–2001. They are calculated by the Laspeyres formula
and are based on the sum of price-weighted quantities of
different agricultural commodities produced after deduc-
tions of quantities used as seed and feed. The prices used
are the ‘‘international dollars’’, derived by FAO using a
Geary–Khamis formula. Land is total agricultural area.
Economically active population in agriculture is used as the
labor variable. The number of tractors in use is a proxy for
machinery. Fertilizer is the quantity in metric tons of plant
nutrient consumed in agriculture. Feed is the total amount
of feed consumed by animals measured in tons of maize
equivalents. Finally, animal stock is the total number of
cattle, buffalos, sheep, goats, and pigs measured in live-
stock units.4
Table 2 reports annual changes of TFP and its compo-
nents in Chinese and Indian agriculture. Trends and evo-
lution of agricultural production, inputs, and TFP and its
components for the period 1961–2006 are shown in Figs. 2
and 3. In the case of China, there is a rapid growth in the
use of inputs during the pre-reform period (Fig. 2). After
the reforms, growth in the use of total inputs flattens while
output growth accelerates, resulting in improved efficiency
and their fastest TFP growth (Fig. 3). TFP growth is rela-
tively low during 1974–1983 (1%) and accelerates during
the 1980s and 1990s (5.6 and 4.4%, respectively). Con-
sidering the whole period 1961–2006, TFP growth in China
was high, with an average annual growth rate of 2.11%.
Poor growth performance coincides with the pre-reform
period and in particular with the Cultural Revolution
(1966–1976), while TFP growth accelerates after the 1978
reforms. The period of poor performance during the Cul-
tural Revolution is explained by the stagnant technical
change and increasing technical inefficiency (Fig. 3). After
4 odological problems explaining these results when using
Animals can contribute in different ways to agricultural production:
breeding stock, traction, fertilizer, store of wealth and they could also
be output. Although animals that are considered part of the output in a
particular year should not be included in the measure of animal stock,
the information provided by FAO is not enough to properly separate
these categories. For this reason we use FAO’s animal stock as a
proxy for capital invested in livestock production, which has been
used extensively in the literature following the paper by Hayami and
Ruttan (1970) who used animal stock and land as proxy variables of
internal resource accumulation in agriculture, and assumed that
service flows from a source are proportional to its stock. Studies using
similar approach are Kawagoe and Hayami (1985), Trueblood and
Coggins (2003), Mundlak and Hellinghausen (1982), and most papers
using the DEA Malmquist approach (e.g., Coelli et al. (2005), Arnade
(1998), Fulginiti and Perrin (1998)). Some of these papers include
poultry in the livestock measure and most of them include pigs. In this
version of the paper animal stock includes cattle, buffalos, sheep,
goats and pigs.
215
1978, the country starts a period of increasing technical
efficiency in agricultural production, transforming the poor
performance of the past into sustained TFP growth and
catching-up to the frontier. After reaching the technologi-
cal frontier in 1997, technical change becomes the driver of
TFP growth in Chinese agriculture.
India’s output growth shown in Fig. 2 follows growth in
inputs, falling behind input growth until the mid-1980s and
growing faster than inputs in the 1990s. However, the
differences between growth rates of output and input are
small, with negative TFP growth rates before 1974. This
situation changes in the mid-1970s, when TFP starts sus-
tained although low growth that lasted until the end of the
period considered in this study (0.3% in 1991–2006).5 In
contrast with China, India’s TFP growth was affected by
lack of improvement in technical efficiency (Fig. 3). Effi-
ciency in India’s agriculture shows a declining trend from
1961 to the late 1980s, it increases after the 1980s, but
growth is slow and by 2006 production efficiency in India’s
agriculture is still 20% below efficiency levels at the
frontier, similar to efficiency levels of the 1960s. The
recovery in efficiency growth after 1980 together with
faster growth in technical change explains India’s
improved performance in the last 15–20 years. This result
apparently contradicts the expected positive effect on
productivity in India’s agriculture during the early Green
Revolution period from 1965–1966 to the mid-1970s.
Murgai (2001) refers to previous studies that also find a
poor performance of the agricultural sector during this
period. He shows that when technical change is not Hicks-
neutral, any chain-linked Divisia Index (like the Tornqvist
index) using observed shares will attribute some of the
contribution of labor and land-saving technical change to
factor accumulation. Although we use a DEA approach
instead of a growth accounting method, we still do not find
the expected productivity gains during the early Green
Revolution period in India. Instead, productivity growth
only improves after 1974. The analysis of possible meth-
the DEA approach is beyond the scope of this study.
We now take a closer look at the use of inputs in China
and India and its evolution between 1961 and 2006 com-
paring this evolution with changes in productivity. Table 3
compares productivity and levels of input indicators, while
Table 4 shows annual growth rates of outputs, inputs,
productivity measures and input relationships. We observe
in Table 3 that agricultural production in China and India
used similar input combinations and intensities in the
1960s, and both countries obtained similar results in the
5
A regression of the log of the cumulative TFP index against a trend
shows that TFP growth is significantly different from zero at the 1%
level in both countries.
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216 J Prod Anal (2010) 33:209–223

Table 2 Annual changes in TFP and decomposition into technical Table 2 continued
change and efficiency change measured as an index (where 1.000
means no change) China India

China India TFP Tech. Efficiency TFP Tech. Efficiency

ch. ch.
TFP Tech. Efficiency TFP Tech. Efficiency
ch. ch. 2005 1.006 1.006 1.000 0.985 1.000 0.985
2006 1.004 1.004 1.000 0.984 1.000 0.984
1961 1.000 1.000 1.000 1.000 1.000 1.000
pre-Reform 0.973 1.011 0.962 0.996 1.002 0.9941
1962 0.950 1.023 0.928 0.989 1.000 0.989
Reform 1.034 1.009 1.025 1.005 1.003 1.002
1963 0.895 1.005 0.891 0.991 1.000 0.991
1964 0.947 1.000 0.946 0.986 1.002 0.985 Source: Author’s estimations
1965 0.949 1.000 0.949 1.011 1.002 1.010
1966 0.948 1.019 0.930 1.005 1.000 1.005
Output China Input China TFP China
1967 0.998 1.000 0.998 0.913 1.000 0.913
Output India Input India TFP India
1968 0.987 1.009 0.978 1.016 1.000 1.016 7
1969 0.974 1.022 0.953 0.993 1.001 0.992 6
1970 1.034 1.014 1.020 0.963 1.000 0.963 5
1971 0.977 1.012 0.965 0.953 1.007 0.946 4
1972 0.902 1.000 0.902 0.968 1.000 0.968 3
1973 1.042 1.022 1.020 1.016 1.000 1.016 2
1974 1.024 1.005 1.019 1.010 1.000 1.010 1
1975 0.964 1.031 0.935 0.984 1.000 0.983
0
1976 0.974 1.009 0.965 1.065 1.016 1.048 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006

1977 0.933 1.009 0.925 0.977 1.000 0.977

Fig. 2 Trends in agricultural output, inputs and TFP in China and
1978 1.032 1.016 1.016 0.962 1.000 0.962 India (1961–2006). Note: Variables are rescaled indices with
1979 0.946 1.000 0.946 1.015 1.000 1.015 1961 = 1. Source: Elaborated by authors using authors’ estimations
1980 0.956 1.052 0.909 1.025 1.000 1.025 and FAO (2008)
1981 1.043 1.000 1.043 1.026 1.000 1.026
1982 1.056 1.000 1.056 1.045 1.001 1.044 TFP China Tech Ch China Efficiency China
1983 0.998 1.000 0.998 1.029 1.004 1.025 TFP India Tech Ch India Efficiency India
1.6
1984 1.082 1.000 1.082 0.970 1.007 0.963
1.4
1985 1.066 1.000 1.066 1.032 1.000 1.032
1986 1.032 1.000 1.032 1.016 1.005 1.011 1.2

1987 0.968 1.000 0.968 1.016 1.023 0.993

1
1988 1.059 1.000 1.059 0.956 1.000 0.956
0.8
1989 1.013 1.000 1.013 1.043 1.003 1.041
1990 1.043 1.000 1.042 1.009 1.008 1.001 0.6
1991 1.058 1.000 1.058 0.971 1.025 0.947
0.4
1992 1.092 1.000 1.092 1.023 1.000 1.023 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
1993 1.140 1.000 1.140 1.024 1.000 1.024
Fig. 3 Cumulative agricultural TFP growth and its decomposition
1994 1.090 1.000 1.090 0.987 1.000 0.987 into technical change and efficiency in China and India (1961–2006).
1995 0.977 1.000 0.977 1.016 1.000 1.016 Note: Variables are rescaled indices with 1961 = 1. Source: Elabo-
1996 1.012 1.000 1.012 1.010 1.000 1.010 rated by authors using authors’ estimations
1997 1.139 1.000 1.139 0.990 1.000 0.990
1998 1.032 1.019 1.013 1.004 1.000 1.004 production process as measured by partial productivity
1999 1.002 1.002 1.000 0.998 1.000 0.998 indicators. Starting with these similarities in the early
2000 1.012 1.012 1.000 1.026 1.000 1.026 1960s, Table 4 shows that there is fast growth in the use of
2001 1.057 1.057 1.000 1.002 1.000 1.002 fertilizer and tractors during the pre-reform period in both
2002 1.025 1.060 0.967 1.036 1.005 1.030 countries. China also increases the use of feed and the
2003 1.046 1.012 1.034 1.004 1.000 1.004 animal stock. Labor grows faster in China but this country
2004 1.024 1.024 1.000 0.992 1.001 0.991 can still expand agricultural land at a rate of 1.1%, while in

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J Prod Anal (2010) 33:209–223 217

Table 3 Level of agricultural and economic indicators at the beginning and end of the period and before the policy reforms
China India
1961–1965 1974–1978 2002–2006 1961–1965 1980–1984 2002–2006

Yield crops (I$/hectare) 526 846 1566 233 353 592

Yield livestock (I$/head) 120 131 605 95 145 316
Output/land (I$/hectare) 179 245 658 277 441 819
a
Output/worker (I$/EAP ) 210 261 717 308 374 535
Inputs
Workers/1,000 ha 855 939 918 899 1178 1531
Fertilizer/worker (kg) 5 20 81 4 30 58
Fertilizer/hectare (kg) 14 77 266 4 38 95
Tractors/1,000 workers 0.2 1.1 2.1 0.2 2.4 10.8
Tractors/1,000 ha 0.6 4.1 6.9 0.2 3.0 17.7
Feed/stock (kg of maize equivalent) 358 543 788 86 102 226
Feed/worker (kg of maize equivalent) 74 160 312 64 66 122
Stock/1,000 workers 206 294 395 744 647 544
Stock/1,000 ha 176 276 363 668 763 832
GDP
GDP (billions 2000 US$) 72 147 1736 82 160 548
Agriculture (billions 2000 US$) 37 63 206 37 55 106
Manufactures (billions 2000 US$) 8 31 590 10 23 85
Services (billions 2000 US$) 28 39 634 26 59 270
Trade
Total imports (billions 2000 US$) – 4 526 5 13 96
Total exports (billions 2000 US$) – 7 667 3 12 100
Openness (trade as % of GDP) 5 10 62 10 15 38
Source: Authors using FAO (2008) and World Bank (2008)
a
EAP is economically active population, in this particular case in agriculture

India, agricultural area remains almost with no change
during this period. These changes resulted in an intensifi-
cation of agricultural production in both countries, with
increased fertilizer and tractors per hectare and worker and
also increased use of feed per animal and worker. The most
important difference between China’s and India’s growth
in this period is the faster growth of labor in India’s agri-
culture, with an average growth rate that more than doubles
that in China. The final result of the pre-reform period
measured in terms of TFP growth is negative for both
countries although India shows a growth rate close to zero
while TFP in China shrinks as a result of growing
inefficiency.
Results of the reform period in China and India are
substantially different. First, the output growth rate in
China is almost twice the rate of growth in India. On the
other hand, inputs used in the production process in China
grow at almost half the speed of inputs in India. Both
countries show increases in the use of fertilizer, tractors
and animal stock, but China increases the use of fertilizer
relative to that of tractors, animals, land and labor. In
contrast with China, India increases the use of tractors
while labor continues to grow. By the end of the period the
number of workers per hectare in India is almost twice of
that in China. On the other hand, the rate of land increase in
the production process during the reform period in China is
the same than in the pre-reform period. These differences
between countries translate in much higher TFP growth in
China, which is explained by increased efficiency in the
use of inputs. The efficiency component of the Malmquist
TFP index shows an average growth of 2.5% in China and
only 0.9% in India.
5 TFP growth and policy change
In this section, we present the methodology used to link
agricultural TFP growth in China and India with their
policy regimes over the past four decades, looking for
evidence of the differential impact of policy changes on the
performance of the agricultural sector in these two coun-
tries. We relate the evolution of agricultural TFP in China
and India with milestones in policy reform by analyzing the
time series properties of TFP estimates for both countries

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Table 4 Growth of agricultural and economic indicators during pre- for ‘‘first generation’’ unit-root tests like those of Dickey
reform and reform periods and Fuller or Phillips and Perron (see for example Vogel-
China India sang and Perron 1998), and a new generation of unit-root
tests that allow for the presence of structural change was
Pre- Reform Pre- Reform
reform reform developed. Among this group of unit root tests are the tests
proposed by Vogelsang and Perron (1998), who define two
Total and partial productivity types of models. The first model, the so called ‘‘additive
TFP -2.7 3.4 -0.42 0.54 outliers’’ model (AO model) captures a sudden change in a
Tech change 1.1 0.9 0.17 0.32 series. The second model, the ‘‘innovational outliers’’
Efficiency -3.8 2.5 -0.59 0.22 model (IO model) allows for a gradual shift in the mean of
Yield crops 3.7 2.0 2.1 2.1 the series. These models were extended by Clemente et al.
Yield livestock 2.1 5.5 2.2 3.4 (1998) to allow for the measure of two structural breaks in
Output/agricultural land 2.7 3.6 2.4 2.5 the series (see discussion in Baum 2001). The model test-
Output/worker 2.1 3.7 1.0 1.3 ing for a gradual change in the mean of the series (IO
Output model) is formulated as:
Total Ag output 3.8 4.7 2.3 2.5 X
2 X
2 X
k
Crops 3.5 3.7 2.3 2.1 yt ¼ dm Dmt þ dm DðTmb Þ þ ayt1 þ hi Dyti þ et
Livestock 6.5 7.9 2.1 3.6 m¼1 m¼1 i¼1

Inputs and input relationships with m ¼ 1; 2

Total inputs 7.1 1.2 3.1 2.0 ð7Þ
Labor 1.7 0.9 1.4 1.2
where T1b and T2b represent the time of the unknown
Land 1.1 1.0 0.1 0.0
endogenous breaks, D1t and D2t are the intercept dummies
Fertilizer 16.2 5.0 14.1 3.2
(Dmt = 1 if t [ Tmt and 0 otherwise); and D(Tb1,t) and
Tractors 14.0 2.9 14.3 7.8
D(Tb2,t) are the crash variables and are equal to 1 for
Feed 9.0 3.1 1.8 4.2
t = Tbm ? 1 and 0 otherwise under the null hypothesis of a
Stock 4.3 2.2 0.8 0.2
unit root. Lagged differences of the variable are also
Workers/1,000 ha 0.6 -0.1 1.3 1.2 included.
Fertilizer/hectare (kg) 14.2 4.1 12.5 2.0 The double-break additive outlier AO model as pre-
Fertilizer/worker (kg) 16.5 3.4 13.9 3.2 sented in Baum (2001, pp. 10) is estimated in a two step
Tractors/1,000 workers 12.1 2.0 12.6 6.5 procedure. In the first step the following regression is
Tractors/1,000 ha 14.3 1.2 14.0 7.8 estimated:
Feed/stock 7.1 2.1 0.4 3.0
X
2
Feed/worker 16.5 3.4 13.9 3.2 yt ¼ l þ dm Dmt þ y~t with m ¼ 1; 2 ð8Þ
Stock/1,000 workers 2.6 1.3 -0.7 -1.0 m¼1
Stock/1,000 ha 3.2 1.2 0.6 0.2
where D1t and D2t are as in (7) dummy variables that take a
Source: Authors using FAO (2008) and World Bank (2008) value of 1 for t greater than the period of the first (Tb1) and
the second (Tb2) structural breaks, respectively. The
residual of this regression (~ yt ) is then regressed against
and test for the existence of structural breaks. We take lagged differences and a set of dummy variables to make
advantage of the availability of models originally devel- the distribution of the test statistic tractable (Baum 2001,
oped to conduct unit root tests of time series allowing for pp. 11):
the presence of structural breaks.
X
k X
k
The existence of structural change in time series data y~t ¼ b1i DTb1;ti þ b2i DTb2;ti þ a~
yti
must be robustly addressed to ensure non spurious results i¼1 i¼1
of unit root tests. If potential structural changes are in fact X
k

present but are not considered in the specification of an þ hi Dyti þ et ð9Þ

econometric model, results of econometric estimations may
be spurious because they can erroneously fail to reject the
non-stationarity hypothesis. For this reason it is important
to test the null hypothesis of structural stability against the
alternative of structural breaks. Several papers have dis-
cussed the implications of the presence of structural breaks
i¼1
In these models, the null hypothesis of a unit root is
rejected if the absolute value of the t-statistic for a ¼ 1 is
greater than the corresponding critical value. The break
time Tb could be determined as the date that minimizes the
value of the t statistic for testing a ¼ 1, or it could also be

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J Prod Anal (2010) 33:209–223 219

defined as the date that maximizes the absolute value (or
minimizes the value) of the t statistics on the coefficients of
the break parameters associated with changes in the inter-
cepts (t~dm ). An important characteristic of these models is
that the breakpoints (Tb1 and Tb2) and the lag order k are
unknown and are located by a grid search for the most
negative t-statistic for the unit root hypothesis of a ¼ 1,
while k is obtained by sequential F-tests (Baum 2001).
Versions of these models to test for the presence of one
structural break like Zivot and Andrews test (1992) follow
the same logic and are not discussed here.
We check for the presence of structural breaks in China
and India’s agricultural TFP series by estimating the AO
and IO models. Our strategy to check for structural change
is to first estimate the models allowing for the presence of
two structural breaks (AO2 and IO2), which are the least
restrictive models. If there is no evidence of two structural
breaks, we then look at results of the models allowing for
one structural break (AO1 and IO1 and Zivot-Andrews).
6 Linking policy changes and TFP growth patterns
Based on Clemente-Montañés-Reyes style tests, we fail to
reject the null hypothesis of non-stationarity in the inno-
vational and the additive models for the TFP and the
technical change and efficiency series. Even when con-
sidering structural breaks in the model the evidence in
favor of nonstationarity is strong and consistent across the
two countries and for the TFP series and its components.
When the tests are conducted on the first differences of
these variables we reject the null hypothesis of nonsta-
tionarity and hence we conclude that all three variables for
both countries are integrated of order one (I(1)). Results of
the structural break tests for the first difference of TFP,
technical change and efficiency change are presented in
Tables 5 and 6 for China and India, respectively. Figures 4
and 5 present the evolution and annual changes in TFP
together with the timing of the structural changes for both
the IO and AO models in both countries.
In the case of China, we find one structural break with
both the AO and the IO models (1982 and 1979, respec-
tively). A sudden shift in the mean of the TFP series (AO
model) corresponds to the full implementation of House-
hold Responsibility System in 1982. A gradual change in
the mean of the series is found to start in 1979 at the
beginning of the rural market liberalization and imple-
mentation of household responsibility system (Table 5;
Fig. 5). Both structural change tests show the importance
of the policy and institutional reforms in agriculture
determining the change in performance of the agricultural
sector in China. During 1979–1990 after the reforms in
agriculture, the TFP index grew at 3% per year compared
to negative growth in the early 1970s. This growth can be
mostly attributed to a fast improvement of technical effi-
ciency. The end of the industrial reforms in 1991/1992
coincides with acceleration in the rate of technical change
with TFP growing at 3.9% per year. This acceleration is

Table 5 Unit root tests with structural breaks for TFP, technical change and efficiency change indexes for China
Model Unit root ^
a Year of first break t-Statistic ^
d1 Year of second break t-Statistic ^
d2

TFP AO2 -6.84* 1982 3.21** 1991 0.40

AO1 -5.90** 1982 4.68**
IO2 -6.75* 1979 3.95** 1992 -0.58
IO1 -6.29* 1979 3.92**
zandrews 1994 -6.67**
Tech. change AO2 -6.36* 1982 -2.39* 1998 3.55**
AO1 -3.33* 1998 2.65*
IO2 -6.50* 1979 -3.93** 1999 5.37**
IO1 -5.92* 1999 2.72**
zandrews 2000 -8.40**
Efficiency AO2 -6.43* 1982 5.27** 1999 -2.12*
AO1 -5.80* 1982 4.64**
IO2 -7.05* 1979 4.64** 1999 -2.16*
IO1 -6.43* 1979 3.90**
zandrews 1994 -6.55**
Note: Variables in natural logs. A ** indicates significance at the 1% level while * indicates significance at the 5% level. HHRS is Household
responsibility system; AO(2) and IO(2) are the additive and the innovational models with two structural break points; AO(1) and IO(1) are the
additive and the innovational models with one structural break point; zandrews is the Zivot-Andrews test with one structural break
Source: Authors’ calculation

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220 J Prod Anal (2010) 33:209–223

Table 6 Unit root tests with structural breaks for TFP, technical change and efficiency change indexes for India
Model Unit root ^
a Year of first t-Statistic ^
d1 Year of second t-Statistic ^
d2
break break

TFP AO2 -7.64* 1974 1.36 1980 0.27

AO1 -7.03* 1974 2.36*
IO2 -7.05* 1973 3.04** 1981 0.09
IO1 -8.01* 1971 2.96**
zandrews 1972 -8.34**
Tech AO2 -2.45 1985 2.02* 1989 -1.76
AO1 -6.45* 1989 -0.13
IO2 -12.50* 1986 1.16 1990 -1.85
IO1 -8.45* 1990 -1.69
zandrews 1992 -7.46**
EC AO2 -7.65* 1974 1.22 1980 0.23
AO1 -7.03* 1974 2.11*
IO2 -7.21* 1979 2.87** 1999 -0.07
IO1 -6.93* 1971 3.25**
zandrews 1972 -7.94**
Note: Variables in natural logs. A ** indicates significance at the 1% level while * indicates significance at the 5% level. HHRS is Household
responsibility system; AO(2) and IO(2) are the additive and the innovational models with two structural break points; AO(1) and IO(1) are the
additive and the innovational models with one structural break point; zandrews is the Zivot-Andrews test with one structural break
Source: Authors’ calculation

Fig. 4 China’s TFP series and estimated structural breaks. Note: The
year of structural break (Tb) based on different models are indicated
by a dotted line. Source: Author’s estimation
captured by the Zivot-Andrews test, which suggests that a
structural break at the TFP series occurred in 1992, after
the industrial reforms. The IO and AO tests applied to the
technical change and efficiency time series capture the
fundamental change in the growth pattern of technology
and efficiency in 1997/1998 when China reaches the
technical frontier and growth in TFP is driven exclusively
by growth in technical change.
Results of tests for structural brakes in the agricultural
TFP series in India are presented in Table 6 and Fig. 5. As
in China, one structural break point was found: 1971 with
the IO1 model, 1974 with the AO1 model and 1972 with
the Zivot-Andrews model. This break in the TFP time
Fig. 5 India’s TFP series and estimated structural breaks. Note: The
year of structural break (Tb) based on the AO2 model is shown by a
solid line, the IO2 model is indicated by a dotted line. Source:
Author’s estimation
series in the early 1970s appears to be related to changes in
policies affecting agriculture as reflected in the NRA
measure presented in Fig. 1. After the crisis of 1974, the
NRA of agriculture in India increases from very low values
signaling a move away at least from the more negative
policy aspects towards agriculture. Changes in the structure
of the TFP series could also be related to the impact of the
Green Revolution and the increasing use of high-yield
varieties, fertilizer and irrigation in previous years, but the
evidence available is not enough to determine this. The
reforms of the 1990s that initiated a period of accelerated
economic growth appear not to have effect on the growth

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J Prod Anal (2010) 33:209–223
of agricultural TFP. Looking at the TFP growth series in
India we verify that the structural break found is separating
two clearly different periods in terms of policies toward the
agricultural sector. After the appalling period that goes
from 1961 to 1973, where TFP shrinks at an annual rate of
-1.66%, TFP growth becomes positive during 1974–1980
(0.46%) and reaches its fastest growth between 1981 and
1991 (almost 1%), to decline after the 1991 reforms and
until 2006 to an average growth of 0.52%.
We conclude highlighting the two main factors that
appear to explain differences in agricultural growth
between China and India as derived from the analysis of
structural change in the agricultural TFP series of these
countries. First, even though both China and India bene-
fited from the Green Revolution, agricultural growth in
China also benefited from more fundamental institutional
reforms in agriculture: the restoration of family farms in
the late 1970s and the movement of large numbers of
workers into rural enterprises, the devolution of fiscal and
administrative powers to local governments, and the
steady introduction of market incentives (Bosworth and
Collins 2008). These changes boosted production effi-
ciency and had larger effect than the liberalization mea-
sures that followed after 1984, becoming the major
explanation of the improved performance of the agricul-
tural sector. No equivalent change is found in India,
where policy changes were mainly adjustments to reduce
the negative effects of policies that were not favorable for
agriculture, in most cases by increasing subsidies for
inputs, credit, etc.
The second factor explaining differences in agricultural
growth is the differential increase in labor productivity that
favored China’s agricultural sector, signaled by a structural
break on the TFP series in 1994. According to Bosworth
and Collins ‘‘…China’s growth in agricultural production
is particularly impressive because it occurred against the
backdrop of declining employment in this sector after
1993.’’ This growth resulted in increased capital invest-
ment and technical change that kept output per worker
growing at high rates. On the other hand, employment in
India’s agricultural sector has continued to grow during the
1993–2006 reform period. Bosworth and Collins attribute
this slower growth ‘‘to an insufficient rate of expansion of
employment opportunities in industry and services relative
to India’s population growth. Hari (2002) also finds that the
degree of employment transformation in India is very low,
with around 60% of the workers still depending on agri-
culture. According to Hari, this delay can be attributed to a
negative trend in employment elasticity, indicating the
decline in absorptive capacity and a drastic decline in
public sector employment, especially during the reform
period. Comparing growth rates of manufactures in both
countries we find that manufacturing value added increased
221
at 11.1% on average in China after the 1979 reforms. The
equivalent figure for India is 6.4 (World Bank 2008).
7 Conclusions
The aim of this paper is to understand the structural dif-
ferences in agricultural growth patterns between China and
India by measuring and comparing agricultural TFP growth
and its components, namely efficiency and technical change
in these countries, covering the period 1961–2006. We also
relate the evolution of TFP to policy milestones and derive
implications for agricultural growth in both countries. Our
TFP estimates show a better performance of China’s agri-
cultural sector, with TFP growing at an average rate of
3.40% after the reforms of the late 1970s and early 1980s. In
India, the equivalent figure for agricultural TFP growth
after the reforms in the late 1980s and early 1990s is 0.54%.
Looking for an interpretation of the differences in TFP
growth observed in China and India after the reforms, our
results point to two main factors. First, agricultural growth in
China benefited from more fundamental institutional
reforms in agriculture that transformed the sector, increasing
efficiency and accelerating technical change. No equivalent
change is found in India, where agricultural policy changes
were mainly adjustments to reduce the negative effects of
policies that were not favorable for agriculture, in most cases
by increasing subsidies for inputs, credit, etc. After the 1991
reforms, the negative effect of macro policies on agriculture
was substantially reduced, but no major policy changes
toward agriculture were put in place. In contrast with China,
no structural change in India’s agricultural TFP series could
be found during the reform years.
The second factor explaining differential agricultural
TFP growth between China and India appears to be the
transformation of the manufacturing sector in China as
shown by the results obtained from the structural break
tests. This transformation further accelerated TFP growth
and technical change in agriculture as reflected in China’s
TFP series and the structural change identified in 1991/
1992, the year marking the end of the industrial reforms.
The reallocation of labor from agriculture to manufacturing
and the increased supply of agricultural inputs resulted in
increased investment and acceleration of technical change
in agriculture with output growing faster than inputs. In
contrast, employment in India’s agricultural sector has
continued to grow during the 1993–2006 reform period as a
result of an insufficient rate of expansion of employment
opportunities in industry and services relative to India’s
population growth.
Looking beyond the specificities of policy changes in
China and India and trying to derive implications for other
developing countries, we find that the main difference
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222
between the growth strategies of both countries was the
priority that China gave to agriculture at the beginning of
the reforms, with the introduction of institutions and poli-
cies that improved agricultural production efficiency and
accelerated catching-up to the frontier. These reforms also
allowed China to take advantage of investments in infra-
structure and agricultural R&D incurred in the 1960s and
1970s, with all this adding up to accelerate agricultural
TFP growth and efficiency.
In the case of India, the main policy directed to agri-
culture was investment in R&D and the promotion and
extension of the technologies of the Green Revolution.
However, the Green Revolution took place during a period
in which agriculture was not a priority in the country’s
development strategy. On the contrary, the implemented
policies during that period normally resulted in negative
rates of protection for agriculture, which were eventually
compensated by subsidies and special measures. Even
during the latest reforms of the 1990s, which changed the
previous policy biased against agriculture, no specific
measures directed to the agricultural sector were imple-
mented, and no significant impacts on TFP growth pattern
can be observed. The policies implemented in India resulted
in inefficient allocation of inputs and in a pattern of agri-
cultural TFP growth with little or even negative contribu-
tions of efficiency growth during the analyzed period.
Acknowledgments Paper prepared for the International Agricul-
tural Productivity Growth Workshop organized by ERS/USDA on
March 15, 2007. Alejandro Nin-Pratt*, Bingxin Yu, and Shenggen
Fan are research fellow, postdoctoral fellow, and the Director,
respectively, Development Strategy and Governance Division, Inter-
national Food Policy Research Institute, Washington DC.
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