Induced Innovation in U.S. Agriculture: Time‐series, Direct Econometric, and Nonparametric Tests

Liu, Yucan; Shumway, C. Richard

doi:10.1111/j.1467-8276.2008.01165.x

Cited by 16 publications

(18 citation statements)

References 29 publications

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“…estimated total quantity of capital used in U.S. agriculture according to the baseline InSTePP series.24 No doubt the divergences among these patterns will be more pronounced in some states than others and compared with the national aggregate, since the national aggregate measures tend to average out some variations.25 Other recent studies using the USDA capital data include:Ball, Bureau, Nehring, and Agapi (1997);Ball, Bureau, Butault, and Nehring (2001);Ball, Butault, and Mesonada (2004);Ball, Hallahan, and Nehring (2004);Pope, LaFrance, and Just (2007); andLiu and Shumway (2009).…”

mentioning

confidence: 99%

Capital Services in U.S. Agriculture: Concepts, Comparisons, and the Treatment of Interest Rates

Andersen

Alston

Pardey

2011

American J Agri Economics

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Measures of capital services are used in studies of production and to inform policies related to growth and development. A variety of methods have been used to measure capital stocks and service flows. We briefly review the methods commonly used to measure capital service flows, and the main assumptions. We then quantify the substantial differences between our newly constructed InSTePP series on capital use in U.S. agriculture and a comparable USDA series. We show that measures of capital services are sensitive to the treatment of interest rates, notably the use of fixed versus variable market rates, and we demonstrate the implications for measures of the quantity and productivity of agricultural capital in the United States. We conclude that when calculating capital usage in U.S. agriculture the use of a fixed rate of interest will generate more plausible estimates than the use of an annual market rate that varies from year to year. Capital Services in U.S. Agriculture: Concepts, Comparisons, and the Treatment of Interest Rates "The capital time series is one that will really drive a purist mad." Robert Solow (1957, p. 314) An accurate measure of the annual flow of capital inputs is valuable for policy makers and researchers who are interested in production and productivity. However, estimates of capital stocks and service flows are difficult to calculate and vulnerable to significant measurement errors because of data limitations and the myriad of assumptions required. Estimates of the flow of capital services are especially sensitive to underlying assumptions. Information about the implications of the alternatives provides a basis for making better-informed choices about the appropriate approaches and assumptions to apply when measuring capital stocks and flows.This article begins with a review of methods used commonly to measure capital stocks and service flows, making explicit a number of important assumptions required to construct such measures. Next, we examine and compare the measures of capital inputs in U.S. agriculture from two contemporary, state-specific panel data sets. We compare the methods used to construct the capital series, and we reveal and discuss differences in data sources, the types of data used to construct the capital measures, and the resulting estimates. We also outline some assumptions about depreciation, service lives, interest rates, aggregation methods, and the scope of goods included in each of the capital series for each data set. Finally, we examine and illustrate the extent to which certain choices

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mentioning

confidence: 99%

Capital Services in U.S. Agriculture: Concepts, Comparisons, and the Treatment of Interest Rates

Andersen

Alston

Pardey

2011

American J Agri Economics

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“…For example, in both Binswanger (1974b) and Huffman and Evenson (1989), a locally non-neutral innovation function could have contributed to their rejection of changes in machinery use being consistent with the induced innovation hypothesis. The same could have occurred in Liu and Shumway's (2009) direct econometric test results with variations in the labor/capital input ratio.…”

Section: Test Resultsmentioning

confidence: 59%

“…Ours differed from theirs only in that relative support was reversed for labor and land. Thus, the emerging evidence of support for the IIH in this industry when innovation supply is accounted for is considerably greater than that found in several other studies that treated innovation supply as input neutral (e.g., Olmstead and Rhode 1993, Machado 1995, Liu and Shumway 2006, Liu and Shumway 2009.…”

Section: Assessmentmentioning

confidence: 65%

“…They tested the IIH using both demand-side data (input prices) from the innovation-implementing industry (U.S. production agriculture) and supplyside data (R&D investments to save individual inputs) from one innovationcreating industry (U.S. public agricultural R&D). They found greater evidence of support for the IIH than other recent studies that tested the hypothesis for the same industry using only demand-side data on input prices and allocations (e.g., Olmstead and Rhode 1993, Machado 1995, Liu and Shumway 2006, Liu and Shumway 2009. The challenge for following their approach in further tests is that suitable supply-side data is seldom available.…”

Section: Introductionmentioning

confidence: 93%

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Non-Neutral Marginal Innovation Costs, Omitted Variables, and Induced Innovation

Lee¹,

Cowan²,

Shumway³

2020

Agric. Resour. Econom. Rev.

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Prior tests of Hicks’ Induced Innovation Hypothesis (IIH) have been greatly hampered because the lack of supply-side data implicitly requires the untenable assumption that the marginal research cost is the same for different inputs. We document that, with appropriate model specification and panel data, a two-way fixed-effects estimator can account for much of the non-neutrality of the innovation function. Using a test procedure that is robust to a time-variant and non-neutral innovation function, we test the IIH in U.S. agriculture for the period 1960–2004. We use only readily available data for innovation demand and total public research expenditures.

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“…Smallholder farmers' participation in agricultural innovation activities is examined from two important perspectives: induced innovation hypothesis (IIH) and the innovation systems approach (ISA) (Sunding and Zilberman 2001;World Bank 2006;Liu and Shumway 2009).…”

Section: Farmers Innovations: Pertinent Literature Reviewmentioning

confidence: 99%

Risk induced farmers’ participation in agricultural innovations: evidence from a field experiment in eastern Ethiopia

Lemessa

Yismaw

Watabaji

2019

Development Studies Research

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It is widely accepted that agricultural innovations are vital to ensure food security and economic development. While farmers are among the key sources of agricultural innovations, many studies conducted in the past conceived them as adopters of externally generated technologies. They regarded farmers only as adopters of induced technologies. This study is designed to analyze farmers' participation in agricultural innovation activities using survey and experimental data. Both descriptive and econometric techniques were employed to analyze the data. It appears that risk attitudes and time preferences are variables that enhance farmers' participation in agricultural innovation activities. Wealth and socioeconomic variables such as access to information and irrigation facilities, input usage and age of household head are significantly correlated with farmers' participation in agricultural innovation activities. The findings comply with the induced innovation hypothesis, which recognizes the importance of threats and opportunities to triggering farmers' participation in agricultural innovation activities.

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Induced Innovation in U.S. Agriculture: Time‐series, Direct Econometric, and Nonparametric Tests

Cited by 16 publications

References 29 publications

Capital Services in U.S. Agriculture: Concepts, Comparisons, and the Treatment of Interest Rates

Capital Services in U.S. Agriculture: Concepts, Comparisons, and the Treatment of Interest Rates

Non-Neutral Marginal Innovation Costs, Omitted Variables, and Induced Innovation

Risk induced farmers’ participation in agricultural innovations: evidence from a field experiment in eastern Ethiopia

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