Economics and Rural Development, Volume 3, Number 1


Katerina Melfou, Athanasios Theocharopoulos, Evangelos Papanagiotou
TEI of Western Macedonia; Aristotle University of Thessaloniki


Total factor productivity (TFP) growth is a widespread quantitative economic instrument used to evaluate the performance and sustainability of agricultural systems over time, which has proven valuable for policy measures geared towards fostering agricultural development. Yet, there are more dimensions to be accounted for when aiming for sustainable agricultural development than the production side of an agricultural system namely, the issues of environmental protection and resource use together with the question of social responsibility. Consequently, objections have risen in the recent decades, regarding the suitability of TFP growth to reveal whether a rural system is progressing in a sustainable course and alternative tools that attempt to remove the bias in measuring changes in productivity have been proposed. The objective of this paper is twofold; to review the conventional approaches in the measurement of TFP growth and to discuss the necessary amendments in TFP measurement so that it can be a more comprehensive index of sustainable growth and thus conducive to agricultural development. The amendments which incorporate externalities and resource quality issues in productivity measurement, produce alternative measures to TFP namely, ‘total resource productivity’ and ‘social’ total factor productivity. Another approach is to construct sustainability and productivity indices separately, and then join them together so as to broaden the evaluation of agricultural systems.

Keyword(s): total factor productivity, sustainability, total resource productivity, agricultural development, externalities


Abramovitz M. (1956). Resource and output trends in the United States since 1870. American Economic Review, 46(1), 5-23.

Antle J.M., Capalbo S.M. (1988). An Introduction to Recent Developments in Production Theory and Productivity Measurement, in Capalbo, S.M., Antle, J.M. (Eds), Agricultural Productivity, Measurement and Explanation, Resources for the Future Washington, D.C

Ball E., Fare R., Grosskopf S., Zaim O. (2005). Accounting for externalities in the measurement of productivity growth: the Malmquist cost productivity measure, Structural Change and Economic Dynamics, 16, 374–394

Barnes A.P. (2002). Publicly funded UK Agricultural R & D and ‘Social’ Total Factor Productivity, Agricultural Economics, 27, 65-74.

Beattie B.R., Taylor C.R. (1985). The Economics of Production, John Wiley and Sons.

Byerlee D., Murgai R. (2001). Sense and Sustainability Revisited: The Limits of Total Factor Productivity Measures of Sustainable Agricultural Systems, Agricultural Economics, 26, 227-236.

Capalbo S.M., Antle J.M (1988). Agricultural Productivity, Measurement and Explanation, Resources for the Future Washington, D.C.

Caves D.W., Christensen L.R., Diewert E. (1982). The Economic Theory of Index Numbers of the Measurement of Input, Output and Productivity, Econometrica, 50:6, 1393-1414.

Christensen L.R., Jorgenson D.W. Lau L.J. (1973) Transcendental Logarithmic Production Frontiers, Review of Economics and Statistics, 55, 28-45

Denney M., Fuss M., Waverman L., (1981). The Measurement and Interpretation of Total Factor Productivity in Regulated Industries with Applications in Canadian Telecommunications in Cowing, T, and Stevenson, R, eds., Productivity Measurement in Regulated Industries, New York: Academic Press.

Diewert W.E. (1971). An application of the Shephard Duality Theorem: A Generalized Leontief Function, Journal of Political Economy, 79, 481-507.

Diewert W.E. (1974). Functional Forms for Profit and Transformation Functions. Journal of Economic Theory, 6, 284-316.

Ehui S.K., Spencer D.S.K. (1993). Measuring the sustainability and economic viability of tropical farming systems: a model from sub-Saharan Africa, Agricultural Economics, 9, 279-296.

Fare R., Grosskopf S, Lindgren B., Roos, P (1992). “Productivity Changes in Swedish Pharmacies 1980-1989: A non parametric Malmquist Approach”, Journal of Productivity Analysis, 3, 85-101.

Fare R., Grosskopf S., Norris M., Zhang Z. (1994). Productivity Growth, Technical Progress and Efficiency Change in Industrialized Countries, American Economic Review, 84, 66-83.

Fare R., Grosskopf S., Lovell C.A.K., Pasurka C. (1989). Multilateral productivity comparisons when some outputs are undesirable: a nonparametric approach, The Review of Economics and Statistics, 71, 90-98.

Gollop F.M., Swinand G.P. (1998). From Total Factor to Total Resource Productivity: An Application to Agriculture, American Journal of Agricultural Economics, 80, 577-584.

Hailu A., Veeman T.S. (2001). Alternative Methods for Environmentally Adjusted Productivity Analysis, Agricultural Economics, 25, 211-218.

Heady E.O., Dillon J.L. (1962). Agricultural Production Functions, Awes, Iowa State University Press.

Hueting R., Reijnders L. (2004). Broad sustainability contra sustainability: the proper construction of sustainability indicators, Ecological Economics, 50, 249– 260

Lynam J.K., Herdt R.W. (1989). Sense and sustainability: Sustainability as an objective in international agricultural research, Agricultural Economics, 3, 381-398.

Nambiar K.K.M, Gupta A.P., Fu Q., Li S. (2001). Biophysical, chemical and socio-economic indicators for assessing agricultural sustainability in the Chinese coastal zone, Agriculture, Ecosystems and Environment, 87, 209–214

Nishimizu M, Page J. (1982). Total Factor Productivity Growth, Technological Progress, Technical Efficiency Change: Dimensions of Productivity Change in Yugoslavia 1965-1978. The Economic Journal, 92, 920-936.

Ray S.C., Desli E. (1997). Productivity Growth, Technical Progress and Efficiency Change in Industrialized Countries: Comment, American Economic Review, 87,1033-1039.

Full Text: PDF


  • There are currently no refbacks.

Economics and Rural Development ISSN 1822-3346 / eISSN 2345-0347

This journal is published under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License. Responsible editors: Prof. Dr Vilija Alekneviciene, Dr Gunita Mazure.