Institutional and Technical Change in Agriculture

Abstract

This essay is based on the premise that expanding the output of domestic agriculture and the size of the agricultural surplus is a major objective of government policy in most Less Developed Countries (LDCs). Our primary emphasis is on the role of technological and institutional innovation in increasing food production and raising output—input ratios of the primary inputs employed in agriculture. Technological advance releases the constraints on production imposed by natural resources and human labour and is typified by a shift from a ‘resource-based sector to a science-based’ industry (Ruttan, 1982, p. 3). Institutional innovation facilitates the development and adoption of appropriate technology. Examples of institutional innovation are the setting up of a publicly financed agricultural research system directed toward biological research and changes in property rights concerning rules of access to land that provide incentives to efficient resource utilisation.