Explaining Growth in Dutch Agriculture: Prices, Public R&D, and Technological Change

This paper analyzes the sources of growth of Dutch agriculture (arable, meat, and dairy sectors). Because the time series data (1950-1997) are non-stationary and not cointegrated, it is argued that a model estimated in first differences should be used. Estimated price elasticities turn out to be very inelastic, both in the short-run and the long-run. The direct distortionary effect of price support has therefore been rather limited. However, price support has an important indirect effect by improving the sectors investment possibilities and therewith the capital stock. Public R&D expenditure mainly affected agriculture by contributing to yield improvement therewith favoring intensification of production