A Fixed Effects Analysis of the Adoption of New Technologies in the Cuban Sugar Industry, 1899-1929

This paper focuses on the relationship between technical and institutional changes in Cuba a leader in the use of continuousprocess technologies being applied to cane sugar manufacture in the first three decades of the twentieth century. Using a fixed effects model of the sugar manufacturer's decision to invest in new technologies, we show that a change in institutional factors had an impact on the adoption of the new technologies. The results show that differences in cane contracting arrangements affected the ease with which mills adopted new technologies. These differences were based on historical factors in the evolution of the cane farming institution in Cuba that affected whether the cane lands were the property of the farmer or the mill. This distinction created differences in the cane farmers' bargaining positions in the renegotiation of contracts with the mill, and it resulted in variation in the long-run costs of procuring cane at different mills