Agro-Climatic Environment Heterogeneity and Productivity Convergence

Abstract

This study proposes an alternative approach for studying the role of countries’ weather differences on agriculture productivity changes. As weather is beyond the control of farmers, we model weather differences by defining time-dependent output-specific agro-climatic environments. These environments condition countries’ production process and technology, and indirectly impact their productivity gains. Building on a tailored database for 91 countries, we study productivity changes between 1961 and 2015. This represents a unique opportunity to analyse productivity changes for many countries over a long period. From a theoretical perspective, we define new output-specific indexes for productivity change and convergence between and within agro-climatic environments and decompose them into several parts. Another distinguishing feature of our approach is to rely on a non-parametric estimation method. We find that agro-climatic environment heterogeneity has a clear impact on productivity change and convergence, that depends on the outputs and evolves. Overall, our results show that productivity change is positive and productivity convergence occurs, both mainly due to technological change. Next, path dependence is observed for efficiency convergence but not for technological convergence. Finally, we cannot confirm that there are technology spillovers.