Technological change : rediscovering the engine of productivity growth in China's rural economy

Forthcoming in Journal of Development Economics (v. 49, p. 337-369, 1996)This paper explores the role of technologfoal change in the growth of agricultural productivity in China. Focusing on the rice subsector, the adoption of two forms of rice technology--hybrid rice and double-cropping--is treated as a decision to be made by the producer. The analysis focuses on measuring the relative importance of the role of technology versus that of institutional innovation. A six equation rice sector model explaining provincial-level technology adoption, yield, and factor demand are econometrically estimated using a unique time series, cross section data set from China's 13 rice growing provinces for the period 1975-90. Growth decomposition analysis identifies technology adoption as the most important determinant of rice yield growth during the early reform period, 1978-84 accounting for nearly 40 percent the change; institutional reform accounted for 35 percent of the growth. In the late reform period, 1985-90, technology accounts for all of the increase since the one-time effects of decollectivization have been exhausted. The study demonstrates earlier studies may have over estimated the impact of decollectivization by not fully accounting for the effects of technology