DETERMINANTS OF AGRICULTURAL PRODUCTIVITY GROWTH: A CASE STUDY OF SOUTH AFRICA FROM 1994 TO 2018

Abstract

This paper applies the Autoregressive Distributed Lag model to analyse the long-run and short-run determinants of agricultural productivity growth in South Africa. The regressor variables are labour, fertilizer, agricultural land, and government expenditure in agriculture regressed against agricultural total factor productivity. In the long-run, agricultural land and government expenditure had a positive relationship with agricultural productivity while labour produced negative results. In the short-run period, only government expenditure had a significant effect on agricultural productivity. Pertaining to the paper’s results it is recommended that the government effectively spend money on redistributing land equitably among South African farmers to bridge the gap between smallholder farmers and commercial farmers. This will curb the inefficiency of labour on farms caused by the dualistic structure of the agricultural sector. Spending more on increasing agricultural land to make labour efficient will have a net positive effect on agricultural productivity growth in South Africa.