Agricultural Total Factor Productivity and Road Infrastructure in South American Countries

In this working paper, we estimate agricultural total factor productivity (Ag TFP) for South American countries over the period 19692016 and identify how road density affect technical efficiency. In 2015, Colombia, Peru, Venezuela, Ecuador, and Bolivia, the Andean countries, had 205,000; 166,000; 96,000; 89,000; and 43,000 kilometers of roads, respectively. A poor-quality and limited road network, along with inaccessibility to markets, might limit the ability of farms to efficiently manage production inputs, raising technical inefficiency. We find that the Ag TFP growth rate per year for South American countries, on average, is 1.5%. For the Andean countries, we find an even smaller growth rate per year of 1.4% on average. Our findings suggest that higher road density is associated with lower technical inefficiency.