The World Bank Economic Review Advance Access originally published online on July 25, 2006
The World Bank Economic Review 2006 20(3):449-471; doi:10.1093/wber/lhl003
How Endowments, Accumulations, and Choice Determine the Geography of Agricultural Productivity in Ecuador
Donald F. Larson is a senior economist in the Development Research Group at the World Bank; his email address is dlarson{at}worldbank.org.
Mauricio León is coordinator of the Sistema Integrado de Indicadores Sociales del Ecuador, in Ecuador’s Ministry of Social Welfare; his email address is mleon{at}frentesocial.gov.ec.
Spatial disparity in incomes and productivity is apparent across and within countries. Most studies of the determinants of such differences focus on cross-country comparisons or location choice among firms. Less studied are the large differences in agricultural productivity within countries related to concentrations of rural poverty. For policy, understanding the determinants of this geography of agricultural productivity is important, because strategies to reduce poverty often feature components designed to boost regional agricultural incomes. Census and endowment data for Ecuador are used to estimate a model of endogenous technology choice to explain large regional differences in agricultural output and factor productivity. A composite-error estimation technique is used to separate systemic determinants from idiosyncratic differences. Simulations are employed to explore policy avenues. The findings suggest a differentiation between the types of policies that promote growth in agriculture generally and those that are more likely to assist the rural poor.